- 2024-07-31T00:00:00
- Company Research
CTG released its H1 2024 results with TOI of VND38.7tn (USD1.5bn; +11% YoY) and PBT of VND13.0tn (USD510mn; +3% YoY), both fulfilling 46% of our FY2024 forecasts. This implies Q2 2024 PBT of VND6.7tn (+9% QoQ; +3% YoY). Overall, CTG’s Q1 2024 earnings were broadly in line with our forecasts. We see no major risk to our current earnings forecast, pending a more extensive review.
- H1 2024 credit growth was 6.7% (loan growth of 6.7%; corporate bonds decreased 3.1% vs Q4 2023 and accounted for 0.3% of the credit balance).
- H1 2024 customer deposit growth was 4.0%. The Q2 2024 CASA ratio was roughly flat QoQ at 22.8%.
- H1 2024 NIM slightly increased by 10 bps YoY to 2.98%, which we attribute mostly to a 176-bp YoY decrease in funding costs given a 4.1-ppt YoY improvement in the CASA ratio. Q2 2024 NIM was also flat QoQ at 2.96%, with decreases in both the IEA yield and funding costs. H1 2024 NII completed 48% of our full-year forecast and was in line with our expectation.
- H1 2024 NOII was VND8.2tn (-13% YoY), completing 42% of our full-year forecast and tracked slightly behind our expectation due to weaker-than-expected gains from trading and investment securities and recovery income from written-off bad debts. However, on a quarterly basis, Q2 2024 NOII still increased 11% QoQ, which was supported by a 40% QoQ increase in net other income (mainly comprised of recovery from written-off bad debts).
- H1 2024 CIR was flat YoY at 25.5% vs our full-year forecast of 28.0%. We expect some seasonal expenses in H2 2024 to increase the full-year CIR.
- On a quarterly basis, the NPL ratio ticked up, but Group 2 loans level improved. The Q2 2024 NPL ratio increased 22 bps QoQ to 1.57% vs our 2024F forecast of 1.20%. However, CTG’s Group 2 loan ratio decreased 15 bps QoQ to 1.44% vs our 2024F forecast of 1.25%. We expect bad debt metrics to reduce in the coming quarters as (1) the bank will accelerate its write-off rate toward the end of the year and (2) credit growth is set to be stronger in H2 2024.
- H1 2024 annualized credit costs spiked to 2.02% vs the average credit costs of 1.73% in 2021-2023. H1 2024 provision expenses jumped 20% YoY, completing 50% of our full-year forecast, and tracks slightly ahead of our expectation. CTG’s Q2 2024 LLR continued to decrease QoQ but remained at the high end compared to peers at 114% (-37 ppts QoQ; -55 ppts YoY).
CTG’s consolidated H1 2024 results
VND bn | H1 2023 | H1 2024 | YoY | Q2 2023 | Q2 2024 | YoY |
NII | 25,424 | 30,513 | 20.0% | 12,757 | 15,339 | 20.2% |
Non-interest income | 9,366 | 8,194 | -12.5% | 5,014 | 4,302 | -14.2% |
OPEX | (9,057) | (9,881) | 9.1% | (4,743) | (5,074) | 7.0% |
PPOP | 25,733 | 28,826 | 12.0% | 13,029 | 14,567 | 11.8% |
Provision expenses | (13,202) | (15,866) | 20.2% | (6,478) | (7,817) | 20.7% |
NPAT-MI | 10,010 | 10,324 | 3.1% | 5,203 | 5,365 | 3.1% |
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Loan growth** | 6.6% | 6.7% | 0.1 ppts | 2.0% | 3.8% | 1.8 ppts |
Deposit growth** | 4.9% | 4.0% | -0.9 ppts | 3.0% | 2.7% | -0.3 ppts |
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NIM | 2.88% | 2.98% | 10 bps | 2.86% | 2.96% | 10 bps |
Interest-earning asset yield | 7.56% | 5.97% | -159 bps | 7.64% | 5.82% | -182 bps |
Cost of funds | 4.95% | 3.19% | -176 bps | 5.09% | 3.05% | -204 bps |
CASA ratio* | 18.7% | 22.8% | 4.1 ppts | 18.7% | 22.8% | 4.1 ppts |
CASA ratio plus term deposits in FX | 21.6% | 25.1% | 3.5 ppts | 21.6% | 25.1% | 3.5 ppts |
CIR | 26.0% | 25.5% | -0.5 ppts | 26.7% | 25.8% | -0.9 ppts |
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NPLs / Gross loans | 1.27% | 1.57% | 30 bps | 1.27% | 1.57% | 30 bps |
Group 2 loans / Gross loans | 2.59% | 1.44% | -115 bps | 2.59% | 1.44% | -115 bps |
Accrued interest / IEAs | 0.74% | 0.61% | -13 bps | 0.74% | 0.61% | -13 bps |
Source: CTG, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q2 2023 and Q2 2024 loan and deposit growth is QoQ growth; H1 2023 and H1 2024 loan and deposit growth is 6M growth.
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