ACB – Weak NOII, asset quality maintained in Q1 2024 – Earnings Flash
  • 2024-04-26T00:00:00
  • Company Research

ACB released its Q1 2024 results with TOI of VND8.2tn (USD327mn; 3.1% YoY) and NPAT of VND3.9tn (USD156; -5.6% YoY), achieving 22% and 21% of our respective full-year forecasts. On a QoQ basis, the Q1 2024 TOI and NPAT both slightly decreased by 3% QoQ. We attribute the relatively weak Q1 2024 results to (1) weak recovery income from written-off bad debts, (2) low gains from FX trading, and (3) an increase in provision expenses. We do not foresee material changes to our earnings forecasts for ACB, pending a fuller review.

  • 3M 2024 credit growth was 3.8% (vs our full-year forecast of ~16%) and higher than the system-wide credit growth of around 1%. According to the bank, the corporate segment was the main driver for ACB’s credit growth in 3M 2024 (+10%) and most of it was due to needs for working capital. 
  • 3M 2024 deposit growth was 2.1% - slightly lower than credit growth. This resulted in an increase in regulated LDR to 81.1% in Q1 2024 from 79.5% in Q4 2023 – per our estimation. We noted that ACB’s deposit rates were among the lowest compared to private banks with the 12M deposit rate was 4.3%. Additionally, ACB’s Q1 2024 CASA was 23.0% (+2.9 ppts YoY & +0.95 ppts QoQ) due to the current low interest rate environment. 
  • Q1 2024 NIM was 3.80%, an increase 3 bps QoQ but decreasing 40 bps YoY vs our full-year forecast of 4.04%. We attribute this to (1) ACB reducing lending rates more than deposit rates to support current customers, as well as acquiring new customers, and (2) a higher proportion of corporate and short-term loans.
  • Q1 2024 NOII was VND1.5tn (-15% YoY and –31% QoQ), completing 19% of our full-year forecast due to (1) the low one-off income from recovery of bad debts (-89% YoY) and (2) low gains from FX trading activities (-47% YoY) that outweighed (2) a decent increase in pure NFI (+19% YoY).
  • 2023 OPEX was well-controlled with CIR at 33.8% (flat YoY and QoQ). This is in line with our full-year forecast for CIR at 34.5%.
  • ACB’s NPL ratio increased to 1.49% in Q1 2024 vs 1.22% in Q4 2023. However, the asset quality of the bank remained intact QoQ as the NPL ratio of gross-up to write-off rate was 1.49% (flat QoQ). Meanwhile, the Group 2 loan ratio increased by 13 bps QoQ to 0.79%.

ACB’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

 6,215 

 6,722 

8.1%

Non-interest income

 1,705 

 1,447 

-15.1%

OPEX

 (2,508)

 (2,764)

10.2%

PPOP

 5,413 

 5,405 

-0.1%

Provision expenses

 (256)

 (512)

100.1%

NPAT-MI

 4,135 

 3,905 

-5.6%

 

 

 

 

Loan growth**

-0.6%

3.8%

4.4 ppts

Deposit growth**

2.1%

2.1%

0.0 ppts

 

 

 

 

NIM

4.20%

3.80%

-40 bps

Interest-earning asset yield

8.94%

6.79%

-215 bps

Cost of funds

5.33%

3.35%

-198 bps

CASA ratio*

20.2%

23.0%

2.8 ppts

CASA ratio plus term deposits in FX

21.4%

23.1%

1.7 ppts

CIR

31.7%

33.8%

2.1 ppts

 

 

 

 

NPLs / Gross loans

0.98%

1.47%

49 bps

Group 2 loans / Gross loans

0.89%

0.79%

-10 bps

Accrued interest / IEAs

0.75%

0.59%

-16 bps

 Source: ACB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q1 2023 and Q1 2024 loan and deposit growth is QoQ growth.

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