- 2024-10-31T00:00:00
- Company Research
CTG released its 9M 2024 results with TOI of VND60.6tn (USD2.4bn; +16% YoY) and PBT of VND19.5tn (USD780mn; +12% YoY), fulfilling 72% and 68% of our FY2024 forecasts, respectively. This implies Q3 2024 PBT of VND6.6tn (-3% QoQ; +34% YoY). Overall, CTG’s 9M 2024 earnings were broadly in line with our forecasts given our expectation for provision expenses to ease in Q4 2024 and the potential continued strong recovery from written-off bad debts. We see no major risk to our current earnings forecast, pending a more extensive review.
9M 2024 credit growth was 9.0% (loan growth of 9.0%; corporate bonds increased 6.2% vs Q4 2023 and accounted for 0.3% of the credit balance).
9M 2024 customer deposit growth was 7.5%. The Q3 2024 CASA ratio was roughly flat QoQ at 23.1%.
9M 2024 NIM slightly increased by 7 bps YoY to 2.95% vs our full-year forecast of 3.04%. The YoY increase in NIM was mostly driven by a 171-bp YoY decrease in funding costs given a 3.1-ppt YoY improvement in the CASA ratio. Q3 2024 NIM slightly decreased by 7 bps to 2.89% due to QoQ lower IEA yield. 9M 2024 NII completes 73% of our full-year forecast and was in line with our expectation.
9M 2024 NOII was VND14.5tn (+6% YoY), completing 70% of our full-year forecast given (1) weak gains from trading and investment securities in Q3 and (2) our expectation for CTG to continue recording recovery income from written-off bad debts in Q4 2024. However, on a quarterly basis, Q3 2024 NOII still increased 47% QoQ, which was supported by a 264% QoQ increase in net other income (mainly comprised of recovery from written-off bad debts).
9M 2024 CIR edged down by 0.7ppts YoY to 26.4% vs our full-year forecast of 28.0%. We expect some seasonal expenses in Q4 2024 to increase the full-year CIR.
On a quarterly basis, the NPL ratio decreased, but the Group 2 loans level was relatively flat. The Q3 2024 NPL ratio decreased 12 bps QoQ to 1.45% vs our 2024F forecast of 1.25%. Q3 2024 Group 4 loans decreased 45% QoQ (VND6.1tn) given that a client in Group 4 was reverted to Group 1 after passing payment probation in July, according to the bank. However, Q3 2024 Group 3 loans increased nearly 3x (VND6.5tn) QoQ, which we believe has created pressure on the bank’s credit costs.
9M 2024 annualized credit costs spiked to 2.2% vs the average credit costs of 1.73% in 2021-2023. 9M 2024 provision expenses increased 22% YoY, completing 79% of our full-year forecast. CTG’s Q3 2024 LLR surged QoQ and remained at the high end compared to peers at 153% (+39 ppts QoQ; -19 ppts YoY).
CTG’s consolidated 9M 2024 results
VND bn | 9M 2023 | 9M 2024 | YoY | Q3 2023 | Q3 2024 | YoY |
NII | 38,511 | 46,091 | 19.7% | 13,087 | 15,578 | 19.0% |
Non-interest income | 13,672 | 14,533 | 6.3% | 4,306 | 6,339 | 47.2% |
OPEX | (14,139) | (15,976) | 13.0% | (5,082) | (6,095) | 19.9% |
PPOP | 38,044 | 44,647 | 17.4% | 12,311 | 15,821 | 28.5% |
Provision expenses | (20,642) | (25,135) | 21.8% | (7,440) | (9,269) | 24.6% |
NPAT-MI | 13,873 | 15,550 | 12.1% | 3,863 | 5,226 | 35.3% |
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Loan growth** | 8.7% | 9.0% | 0.3 ppts | 2.0% | 2.2% | 0.2 ppts |
Deposit growth** | 4.9% | 7.5% | 2.6 ppts | 0.0% | 3.4% | 3.4 ppts |
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NIM | 2.88% | 2.95% | 7 bps | 2.87% | 2.89% | 2 bps |
Interest-earning asset yield | 7.45% | 5.88% | -157 bps | 7.20% | 5.74% | -146 bps |
Cost of funds | 4.85% | 3.14% | -171 bps | 4.64% | 3.05% | -159 bps |
CASA ratio* | 20.0% | 23.1% | 3.1 ppts | 20.0% | 23.1% | 3.1 ppts |
CASA ratio plus term deposits in FX | 22.9% | 25.6% | 2.7 ppts | 22.9% | 25.6% | 2.7 ppts |
CIR | 27.1% | 26.4% | -0.7 ppts | 29.2% | 27.8% | -1.4 ppts |
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NPLs / Gross loans | 1.37% | 1.45% | 8 bps | 1.37% | 1.45% | 8 bps |
Group 2 loans / Gross loans | 2.37% | 1.44% | -93 bps | 2.37% | 1.44% | -93 bps |
Accrued interest / IEAs | 0.69% | 0.58% | -11 bps | 0.69% | 0.58% | -11 bps |
Source: CTG, 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.
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