HDB – Robust NII supports earnings; strong credit & deposit growth – Earnings Flash
  • 2024-01-31T00:00:00
  • Company Research

HDB released 2023 consolidated results with PBT of VND13.0tn (USD533mn; +26.8% YoY), achieving 110% of our FY2023 and tracking ahead of our expectations mainly due to higher-than-expected NII. This implies Q4 2023 PBT of VND4.4tn (+94.7% YoY; +39.3% QoQ). We see potential upside to our current earnings forecasts, pending a more extensive review.

  • The parent bank’s 2023 credit growth was 34.2%. This credit increase derives from (1) loan growth of 32.5% and (2) a 33.4% increase in the corporate bond balance from a low base in Q4 2022. As of 2023, corporate bonds accounted for 3.0% of HDB’s total credit exposure. We observe that strong 2023 loan growth was mainly driven by credit to wholesale and retail, household loans, and real estate business. Additionally, credit to real estate business accounted for 17.9% of the parent bank’s 2023 loan book (vs 8.5% in 2022). 
  • According to our estimation, HDS’s 2023 loan book increased 7.0% QoQ and decreased 4.5% YoY to VND16.1tn (USD659mn) — with its loan book contributing ~4.7% to the consolidated loan book. 
  • 2023 consolidated deposit growth of 71.8% was the highest in our coverage and driven by retail customer deposits. The bank stated that customer acquisition via online channels experienced robust growth in 2023.
  • 2023 NIM was 4.83%, which was higher than our full-year forecast of 4.63%. Q4 2023 NIM increased 160 bps QoQ from a low base to a record high of 6.00% despite strong deposit growth, which we attribute mainly to (1) funding costs lowering faster than the IEA yield, (2) the lagged positive impact on interest income from strong credit growth in late Q3 2023, and (2) the improvement in HDS’s performance. 
  • 2023 NOII of VND4.2tn completed 89% of our full-year forecast and implies Q4 2023 NOII of VND785bn (-16.2% YoY & -32.8% QoQ). Q4 2023 NOII trailed our expectation mainly due to weaker-than-expected pure NFI and gains from trading securities. 
  • 2023 consolidated CIR improved 4.7 ppts YoY to 34.6% vs our full-year forecast of 35.5%. 
  • Q4 2023 consolidated NPL ratio improved 47 bps QoQ to 1.79%, in which we estimate that the parent bank’s 2023 NPL ratio was 1.51% (-45 bps QoQ) and HDS’s NPL ratio was 7.62% (-29 bps QoQ). However, the Q4 2023 consolidated Group 2 loans level remained high at 5.24% (+20 bps QoQ). 
  • 2023 credit cost was 1.2% (flat YoY), and 2023 consolidated LLR was 65.8% (vs 70.4% and 54.2% in 2022 and Q3 2023, respectively). 
  • 2023 CAR of 12.6% was higher than that of peers’ average level.    

Figure 1: HDB’s consolidated 2023 results 

VND bn

2022

2023

YoY

Q4 2022

Q4 2023

YoY

NII

 18,012 

 22,184 

23.2%

 4,932 

 7,473 

51.5%

Non-interest income

 3,956 

 4,230 

6.9%

 937 

 785 

-16.2%

OPEX

 (8,631)

 (9,129)

5.8%

 (2,671)

 (2,630)

-1.5%

PPOP

 13,336 

 17,284 

29.6%

 3,198 

 5,628 

76.0%

Provision expenses

 (3,068)

 (4,268)

39.1%

 (946)

 (1,242)

31.4%

NPAT-MI

 7,750 

 10,071 

30.0%

 1,736 

 3,344 

92.6%

 

 

 

 

 

 

 

Loan growth**

29.8%

30.1%

0.3 ppts

7.0%

17.7%

10.7 ppts

Deposit growth**

17.7%

71.8%

54.1 ppts

3.9%

8.5%

4.6 ppts

 

 

 

 

 

 

 

NIM

4.98%

4.83%

-16 bps

5.33%

6.00%

68 bps

Interest-earning asset yield

9.22%

11.45%

223 bps

10.55%

12.50%

194 bps

Cost of funds

4.36%

6.75%

239 bps

5.39%

6.57%

118 bps

CASA ratio*

10.6%

11.1%

0.4 ppts

10.6%

11.1%

0.4 ppts

CASA ratio plus term deposits in FX

11.1%

11.6%

0.5 ppts

11.1%

11.6%

0.5 ppts

CIR

39.3%

34.6%

-4.7 ppts

45.5%

31.9%

-13.7 ppts

 

 

 

 

 

 

 

NPLs / Gross loans

1.67%

1.79%

12 bps

1.67%

1.79%

12 bps

Group 2 loans / Gross loans

2.80%

5.24%

244 bps

2.80%

5.24%

244 bps

Accrued interest / IEAs

1.17%

1.11%

-7 bps

1.17%

1.11%

-7 bps

Source: HDB, 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.

Figure 2: HDB’s standalone 2023 results

VND bn

2022

2023

YoY

Q4 2022

Q4 2023

YoY

NII

 13,381 

 17,305 

29.3%

 3,764 

 6,237 

65.7%

Non-interest income

 3,268 

 3,556 

8.8%

 669 

 526 

-21.5%

OPEX

 (6,476)

 (6,834)

5.5%

 (2,118)

 (2,059)

-2.8%

PPOP

 10,173 

 14,026 

37.9%

 2,315 

 4,704 

103.2%

Provision expenses

 (698)

 (1,290)

84.8%

 (220)

 (577)

163.0%

NPAT-MI

 7,649 

 10,186 

33.2%

 1,675 

 3,241 

93.5%

 

 

 

 

 

 

 

Loan growth**

30.1%

32.5%

2.4 ppts

7.5%

18.3%

10.8 ppts

Deposit growth**

17.7%

71.8%

54.1 ppts

3.9%

8.5%

4.6 ppts

 

 

 

 

 

 

 

NIM

3.81%

3.86%

5 bps

4.20%

5.13%

93 bps

Interest-earning asset yield

8.05%

10.50%

244 bps

9.47%

11.60%

213 bps

Cost of funds

4.32%

6.71%

238 bps

5.38%

6.50%

112 bps

CASA ratio*

10.6%

11.1%

0.5 ppts

10.6%

11.1%

0.5 ppts

CASA ratio plus term deposits in FX

11.1%

11.2%

0.1 ppts

11.1%

11.2%

0.1 ppts

CIR

38.9%

32.8%

-6.1 ppts

47.8%

30.4%

-17.3 ppts

 

 

 

 

 

 

 

NPLs / Gross loans

1.30%

1.51%

21 bps

1.30%

1.51%

21 bps

Group 2 loans / Gross loans

2.32%

5.05%

273 bps

2.32%

5.05%

273 bps

Accrued interest / IEAs

1.13%

1.09%

-4 bps

1.13%

1.19%

6 bps

Source: HDB, 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.

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