BID – Weak TOI despite strong credit growth; bad debt metrics tick up QoQ

BID released its 9M 2024 results with TOI of VND54.7tn (USD2.2bn; +4% YoY) and PBT of VND22.1tn (USD882mn; +12% YoY), fulfilling 67% and 69% of our respective 2024F forecasts. These results imply Q3 2024 PBT of VND6.5tn (-20% QoQ; +10% YoY). Overall, BID’s results tracked slightly behind our expectation mainly due to weaker-than-expected top-line growth. We see potential downside risk to our earnings forecast, pending a more extensive review.

9M 2024 credit growth was 9.9% (loan growth of 9.9%; corporate bonds decreased 10.0% vs Q4 2023 and accounted for 0.3% of total credit) vs our full-year forecast of 14.0%. BID’s 9M 2024 credit growth by sectors: agricultural, forestry & fishery (12.3%); manufacturing and processing (7.8%); utilities (5.7%); construction (-6.4%); wholesales & retail trade (5.8%); services (18.0%).
9M 2024 customer deposits growth was 9.9% vs our full-year forecast of 13.0% YoY. The CASA ratio was relatively flat QoQ at 18.7%.
NIM contracted QoQ and YoY. 9M 2024 NIM dropped 26 bps YoY to 2.36%, which we attribute mainly to a 144-bp plunge in the IEA yield. We think this could be partly due to (1) support packages for customers, (2) weaker YoY bad debts recovery, and/or (3) preferential lending rates amid strong 9M credit growth. Additionally, Q3 2024 NIM decreased 25 bps QoQ after a recovery in Q2 2024, which was mainly driven by (1) a 20-bp QoQ decrease in the IEA yield and (2) a 5-bp QoQ increase in funding costs.
Weak NOII performance in Q3 2024: 9M 2024 NOII was VND12.3tn (+10% YoY), completing 66% of our full-year forecast, driven by (1) a 3% YoY increase in pure NFI, (2) a 25% YoY spike in gains from FX trading, and (2) a 10% YoY increase in net other income (mainly comprised of recovery from written-off bad debts). Q3 2024 NOII decreased 39% QoQ from a high base in Q2 2024; however, net other income increased 46% QoQ.
9M 2024 CIR was relatively flat YoY at 33.7% vs our full-year forecast of 34.6%. Normally, BID’s CIR in the later quarters of the year is higher, which we believe could be due to some seasonal expenses.
Bad debt metrics inched up QoQ. The Q3 2024 NPL ratio was 1.71% (+19 bps QoQ; +11 bps YoY). The Group 2 loans level was 1.67% (+8 bps QoQ; -19 bps YoY). Additionally, Q3 2024 LLR continued to decrease to a three-year low level at 115.7% (-16 ppts QoQ; -43 ppts YoY).
9M 2024 provision expenses decreased 8% YoY and tracked behind our expectation (completing 67% of our full-year forecast). We expect higher provision expenses in the coming quarters amid a QoQ deterioration in Q3 2024 asset quality and BID’s current historic low provisioning buffer.

BID’s consolidated 9M 2024 results

VND bn	9M 2023	9M 2024	YoY	Q3 2023	Q3 2024	YoY
NII	41,266	42,369	2.7%	13,783	13,990	1.5%
Non-interest income	11,155	12,286	10.1%	4,103	3,269	-20.3%
OPEX	(17,250)	(18,408)	6.7%	(6,044)	(6,308)	4.4%
PPOP	35,172	36,246	3.1%	11,842	10,951	-7.5%
Provision expenses	(15,410)	(14,200)	-7.9%	(5,950)	(4,453)	-25.2%
NPAT-MI	15,477	17,330	12.0%	4,582	5,148	12.4%

Loan growth**	8.6%	9.9%	1.3 ppts	1.5%	3.7%	2.2 ppts
Deposit growth**	7.5%	9.9%	2.4 ppts	2.5%	3.7%	1.2 ppts

NIM	2.62%	2.36%	-26 bps	2.62%	2.24%	-38 bps
Interest-earning asset yield	7.32%	5.88%	-144 bps	7.25%	5.50%	-175 bps
Cost of funds	5.02%	3.51%	-151 bps	4.97%	3.44%	-153 bps
CASA ratio*	18.3%	18.7%	0.4 ppts	18.3%	18.7%	0.4 ppts
CASA ratio plus term deposits in FX	22.2%	22.5%	0.3 ppts	22.2%	22.5%	0.3 ppts
CIR	32.9%	33.7%	0.8 ppts	33.8%	36.5%	2.7 ppts

NPLs / Gross loans	1.60%	1.71%	11 bps	1.60%	1.71%	11 bps
Group 2 loans / Gross loans	1.86%	1.67%	-19 bps	1.86%	1.67%	-19 bps
Accrued interest / IEAs	0.73%	0.83%	10 bps	0.73%	0.83%	10 bps

Source: BID, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q3 2023 and Q3 2024 loan and deposit growth is QoQ growth; 9M 2023 and 9M 2024 loan and deposit growth is 9M growth.