HDB – Strong top-line growth; bad debt metrics improve QoQ – Earnings Flash
  • 2024-10-29T00:00:00
  • Company Research

HDB released its 9M 2024 consolidated results with PBT of VND12.7tn (USD506mn; +47% YoY), achieving 77% of our FY2024 forecast and tracked slightly ahead of our expectation, mostly due to slightly lower-than-expected provision expenses. This implies Q3 2024 PBT of VND4.5tn (+9% QoQ; +43% YoY). We see potential upside to our current earnings forecasts, pending a more extensive review. 

  • 9M 2024 parent bank’s credit growth was 17.0% (including loan growth of 16.5% and corporate bond growth of 31.8%). As of Q3 2024, corporate bonds accounted for 3.5% of HDB’s total credit exposure.
  • 9M 2024 consolidated deposit growth was 7.1%. The Q3 2024 CASA ratio slightly decreased by 1.0 ppts QoQ to 8.9% (+1.7 ppts YoY).  
  • 9M 2024 NIM was 5.30% (+91 bps YoY), slightly higher than our full-year forecast of 5.26%. Q3 2024 NIM was 5.46% (-14 bps QoQ; +105 bps YoY). The QoQ NIM contraction was mainly driven by a 34-bp QoQ decrease in the IEA yield that outweighed a 16-bp QoQ decrease in funding costs. 
  • 9M 2024 NOII of VND1.9tn (-44% YoY) tracked behind our expectation (completing 64% of our full-year forecast) due to losses from trading/investment activities.   
  • 9M 2024 CIR was 34.3% (-1.5 ppts YoY; roughly the same as our full-year forecast). 
  • Asset quality improved QoQ. Q3 2024 NPL ratio: 1.90% (-20 bps QoQ; -37 bps YoY). Q3 2024 group 2 loans to gross loans: 3.75% (-75 bps QoQ; -130 bps YoY). Q3 2024 consolidated LLR was 65.9% (+7.1 ppts QoQ; +11.7 ppts YoY).
  • 9M 2024 provision expenses of VND3.5tn (+15% YoY) complete 62% of our full-year forecast and tracked behind our expectation. Despite a QoQ improvement in bad debt metrics, we expect higher provision expenses in coming quarters given (1) the remaining high Group 2 loans level and (2) our expectation for HDB to increase its provisioning buffer.   
  • ROE was 26.7% and ROA was 2.2% in 9M 2024. Q3 2024 CAR was 14.8%, among the highest CAR in the banking system. 
  • HDSaison: 9M 2024 loan growth was 7%. 9M 2024 PBT was VND906bn (+126% YoY; completing 70% of our full-year forecast; in line with our expectation). We estimate that the Q3 2024 NPL ratio was 7.5% (flat QoQ).

Figure 1: HDB’s consolidated 9M 2024 results

VND bn 

 9M 2023 

 9M 2024 

 YoY 

 Q3 2023 

 Q3 2024 

 YoY 

 NII 

 14,711 

 22,654 

54.0%

 4,916 

 7,773 

58.1%

 Non-interest income 

 3,445 

 1,926 

-44.1%

 1,169 

 762 

-34.9%

 OPEX 

 (6,499)

 (8,435)

29.8%

 (2,302)

 (2,951)

28.2%

 PPOP  

 11,657 

 16,145 

38.5%

 3,783 

 5,584 

47.6%

 Provision expenses 

 (3,025)

 (3,490)

15.3%

 (636)

 (1,093)

71.9%

 NPAT-MI     

 6,727 

 9,649 

43.4%

 2,480 

 3,424 

38.0%

 

 

 

 

 

 

 

 Loan growth** 

10.6%

16.1%

5.6 ppts

1.5%

3.2%

1.7 ppts

 Deposit growth**  

58.3%

7.1%

-51.3 ppts

10.4%

2.7%

-7.7 ppts

 

 

 

 

 

 

 

 NIM 

4.39%

5.30%

91 bps

4.40%

5.46%

105 bps

 Interest-earning asset yield 

11.07%

10.02%

-105 bps

11.99%

9.98%

-201 bps

 Cost of funds 

6.79%

4.84%

-195 bps

7.72%

4.64%

-308 bps

 CASA ratio* 

7.2%

8.9%

1.7 ppts

7.2%

8.9%

1.7 ppts

 CASA ratio plus term deposits in FX    

7.3%

9.0%

1.7 ppts

7.3%

9.0%

1.7 ppts

 CIR 

35.8%

34.3%

-1.5 ppts

37.8%

34.6%

-3.3 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

2.26%

1.90%

-37 bps

2.26%

1.90%

-37 bps

 Group 2 loans / Gross loans  

5.04%

3.75%

-130 bps

5.04%

3.75%

-130 bps

 Accrued interest / IEAs  

1.18%

1.13%

-6 bps

1.18%

1.13%

-6 bps

Source: HDB, 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.

Figure 2: HDB’s standalone 9M 2024 results

VND bn 

 9M 2023 

 9M 2024 

 YoY 

 Q3 2023 

 Q3 2024 

 YoY 

 NII 

 11,067 

 18,635 

68.4%

 3,697 

 6,394 

72.9%

 Non-interest income 

 3,030 

 984 

-67.5%

 903 

 445 

-50.8%

 OPEX 

 (4,775)

 (6,689)

40.1%

 (1,674)

 (2,360)

41.0%

 PPOP  

 9,323 

 12,930 

38.7%

 2,926 

 4,478 

53.1%

 Provision expenses 

 (713)

 (1,204)

68.9%

 136 

 (315)

-331.2%

 NPAT-MI     

 6,945 

 9,264 

33.4%

 2,447 

 3,280 

34.0%

 

 

 

 

 

 

 

 Loan growth** 

12.0%

16.5%

4.5 ppts

1.8%

3.3%

1.5 ppts

 Deposit growth**  

58.3%

7.1%

-51.3 ppts

10.4%

2.7%

-7.7 ppts

 

 

 

 

 

 

 

 NIM 

3.39%

4.45%

105 bps

3.40%

4.58%

118 bps

 Interest-earning asset yield 

10.10%

9.15%

-94 bps

11.00%

9.10%

-190 bps

 Cost of funds 

6.76%

4.79%

-197 bps

7.67%

4.60%

-306 bps

 CASA ratio* 

7.2%

8.9%

1.7 ppts

7.2%

8.9%

1.7 ppts

 CASA ratio plus term deposits in FX    

7.3%

9.0%

1.7 ppts

7.3%

9.0%

1.7 ppts

 CIR 

33.9%

34.1%

0.2 ppts

36.4%

34.5%

-1.9 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

1.96%

1.65%

-31 bps

1.96%

1.65%

-31 bps

 Group 2 loans / Gross loans  

4.83%

3.56%

-126 bps

4.83%

3.56%

-126 bps

 Accrued interest / IEAs  

1.19%

1.10%

-8 bps

1.19%

1.25%

6 bps

Source: HDB, 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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