CTG – Drop in credit costs supports earnings growth – Earnings Flash
  • 2024-01-30T00:00:00
  • Company Research

CTG released its 2023 results with TOI of VND70.7tn (USD2.9bn; +10.2% YoY) and NPAT-MI of VND20.0tn (USD826mn; +18.1% YoY), fulfilling 99% and 110% of our respective FY2023 forecasts. Q4 2023 NPAT-MI was VND6.1tn (+58.4% QoQ; +43.1% YoY). Overall, CTG’s results were better than we anticipated mainly due to lower-than-expected provision expenses. We see potential upside to our earnings forecast for CTG, pending a more extensive review.

  • 2023 credit growth was 15.5% YoY, with gross loans increasing 15.6% YoY while the corporate bond book decreased 2.4% YoY and accounted for 0.3% of the credit balance. Q4 2023 credit growth alone was 6.2 QoQ%. 
  • 2023 customer deposit growth was 12.9% YoY vs our full-year forecast of 9.0% YoY. In Q4 2023, CTG’s CASA ratio improved better than our expectation, increasing by 2.5 ppts QoQ and 2.5 ppts YoY to 22.5%.
  • 2023 NIM decreased 12 bps YoY to 2.86%, which fell behind our full-year forecast of 2.93%. However, Q4 2023 NIM increased 18 bps QoQ mainly thanks to a drop in the COF, which could have been due to the improving CASA ratio and/or deposit balance rolling over with lower deposit rates, outweighing the drop in the IEA yield.
  • 2023 NOII was VND17.6tn (+7.7% YoY), completing 97% of our full-year forecast. Decent NOII growth was mainly driven by (1) a 22.0% YoY increase in pure NFI, (2) 19.5% YoY increase in gains from FX trading, and (3) VND138bn of net gains from trading and investment securities vs a net loss of VND142bn in 2022, which are partly offset by a 12.1% YoY decrease in net other income that could have been due to weaker recovery income from written-off bad debts.
  • 2023 CIR decreased 1.0 ppts YoY to 28.9% vs our full-year forecast of 30.0%, thanks to a 10.2% YoY increase in TOI that outweighed a 6.5% YoY increase in OPEX. 
  • Asset quality remained intact QoQ. Q4 2023 NPL ratio grossed up write-off rate increased 30 bps QoQ to 2.94% vs our forecast for YE2023 NPL ratio grossed up write-off rate of 2.95%. However, CTG’s Group 2 loan ratio improved better than our anticipation, which decreased by 82 bps QoQ to 1.55% vs our forecast of 2.10%.
  • Q4 2023 annualized credit costs of 1.21% were the lowest level since Q2 2021. 2023 credit costs improved to 1.70% from 1.87% in 2022 (vs our full-year forecast 1.88%). CTG’s LLR remained at a high-end of the peer of 167% in Q4 2023 (-5 ppts QoQ; -19 ppts YoY).

CTG’s consolidated 2023 results

VND bn

2022

2023

YoY

Q4 2022

Q4 2023

YoY

NII

47,792

53,083

11.1%

12,710

14,572

14.7%

Non-interest income

16,325

17,575

7.7%

4,073

3,903

-4.2%

OPEX

(19,195)

(20,443)

6.5%

(6,254)

(6,304)

0.8%

PPOP

44,922

50,215

11.8%

10,528

12,171

15.6%

Provision expenses

(23,791)

(25,115)

5.6%

(5,160)

(4,473)

-13.3%

NPAT-MI

16,924

19,992

18.1%

4,276

6,119

43.1%

 

 

 

 

 

 

 

Loan growth**

12.8%

15.6%

2.8 ppts

2.4%

6.3%

3.9 ppts

Deposit growth**

7.5%

12.9%

5.4 ppts

5.0%

7.7%

2.7 ppts

 

 

 

 

 

 

 

NIM

2.98%

2.86%

-12 bps

2.98%

3.05%

7 bps

Interest-earning asset yield

6.52%

7.14%

62 bps

7.12%

6.84%

-28 bps

Cost of funds

3.72%

4.51%

79 bps

4.33%

4.05%

-28 bps

CASA ratio*

20.0%

22.5%

2.5 ppts

20.0%

22.5%

2.5 ppts

CASA ratio plus term deposits in FX

22.7%

25.1%

2.4 ppts

22.7%

25.1%

2.4 ppts

CIR

29.9%

28.9%

-1.0 ppts

37.3%

34.1%

-3.2 ppts

 

 

 

 

 

 

 

NPLs / Gross loans

1.24%

1.13%

-11 bps

1.24%

1.13%

-11 bps

Group 2 loans / Gross loans

2.35%

1.55%

-80 bps

2.35%

1.55%

-80 bps

Accrued interest / IEAs

0.72%

0.74%

2 bps

0.72%

0.74%

2 bps

Source: CTG, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q4 2022 and Q4 2023 loan and deposit growth is QoQ growth; 2022 and 2023 loan and deposit growth is YoY growth.

Powered by Froala Editor