CTG – Strong TOI growth counteracts spike in credit costs – Earnings Flash
  • 2024-04-27T00:00:00
  • Company Research

CTG released its Q1 2024 results with TOI of VND19.1tn (USD762mn; +12% YoY) and PBT of VND6.2tn (USD248mn; +4% YoY), fulfilling 23% and 21% of our respective FY2024 forecasts. Overall, CTG’s Q1 2024 earnings were broadly in line with our forecasts as double-digit TOI growth helped to counteract slightly higher-than-expected provision expenses.

  • Q1 2024 credit growth was 2.8% (loan growth of 2.8%; corporate bonds decreased 9.6% QoQ and accounted for 0.3% of the credit balance). 
  • Q1 2024 customer deposit growth was 1.2%. The Q1 2024 CASA ratio was roughly flat QoQ at 22.2%.
  • Q1 2024 NIM was also flat QoQ at 3.03%, with decreases in both the IEA yield and funding costs. Q1 2024 NII completed 25% of our full-year forecast and was slightly better than our expectation.  
  • Q1 2024 NOII was VND3.9tn (-11% YoY), completing 17% of our full-year forecast and tracked behind our expectation due to weaker-than-expected pure fee income and recovery income from written-off bad debts. However, a 15% YoY increase in gains from FX trading supported NOII. 
  • Q1 2024 CIR was flat YoY at 25.3% vs our full-year forecast of 29.0%. We expect some seasonal expenses in H2 2024 to increase the full-year CIR. 
  • Bad debt metrics ticked up QoQ. Q1 2024 NPL ratio increased 22 bps QoQ to 1.35% vs our 2024F of 1.10%. However, CTG’s Group 2 loan ratio was relatively flat at QoQ at 1.59% vs our 2024F forecast of 1.25%. Q1 2024 annualized write-off rate was 1.3% vs our full-year forecast of 1.6%. 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 the remainder of 2024. 
  • Q1 2024 annualized credit costs spiked to 2.13% vs the two-year-low level of 1.21% in Q4 2023. Provision expenses jumped 20% YoY and 80% QoQ from a low base in Q4. It completes 26% of our full-year forecast, and tracks slightly ahead of our expectation. CTG’s Q1 2024 LLR continued to decrease QoQ but remained at the high end compared to peers at 151% (-16 ppts QoQ; -22 ppts YoY).

 

CTG’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

 12,666 

 15,174 

19.8%

Non-interest income

 4,352 

 3,893 

-10.6%

OPEX

 (4,314)

 (4,807)

11.4%

PPOP

 12,704 

 14,259 

12.2%

Provision expenses

 (6,724)

 (8,049)

19.7%

NPAT-MI

 4,806 

 4,959 

3.2%

 

 

 

 

Loan growth**

4.6%

2.8%

-1.8 ppts

Deposit growth**

1.9%

1.2%

-0.7 ppts

 

 

 

 

NIM

2.90%

3.03%

13 bps

Interest-earning asset yield

7.50%

6.18%

-132 bps

Cost of funds

4.84%

3.36%

-148 bps

CASA ratio*

18.1%

22.2%

4.1 ppts

CASA ratio plus term deposits in FX

20.9%

24.6%

3.7 ppts

CIR

25.3%

25.2%

-0.1 ppts

 

 

 

 

NPLs / Gross loans

1.28%

1.35%

7 bps

Group 2 loans / Gross loans

2.67%

1.59%

-108 bps

Accrued interest / IEAs

0.77%

0.71%

-6 bps

Source: CTG, 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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