• We attended LPB’s AGM in Ninh Binh on April 17, with attendances representing 86.2% of LPB’s outstanding shares. Of these, 77.8% of the total voting rights were authorized and shareholders directly attending the AGM accounted for 8.4% of total voting rights. 
• The main agenda was to (1) review LPB’s 2023 business results, (2) approve 2024 targets, (3) approve stock dividend plans, (4) approve a plan to change the bank’s full name and purchase/receive the transfer of assets, and (5) resignation of a Board of Supervisors (BOS) member in the 2023-2028 term.
• Primary 2024 targets include (1) credit growth of 15.9% vs our current assumption of 15.0%, (2) funding growth of 11.2% vs our current forecast of 13.5%, and (3) PBT of VND10.5tn (+49.2% YoY) vs our full-year forecast of VND8.1tn (+16.7% YoY). We note that LPB changed its 2024F PBT guidance from +35.0% YoY to +49.2% YoY.
• Shareholders approved a dividend distribution plan that does not pay cash dividends over the next three years in order to improve financial capacity.
• The private placement to foreign shareholders and ESOP plans that were proposed at the 2023 AGM were canceled in favor of the new rights issuance plans of 800 million shares to existing shareholders at a price of not lower than VND10,000/share proposed at this year’s AGM. This is equivalent to 32.3% pre-issuance and 23.8% post-issuance.
• We currently have an UNDERPERFORM rating for LPB with target price at VND14,900/share.

Although 2023 PBT was a high base, LPB targets for a 49.2% YoY increase in 2024 PBT. According to the bank’s management, to achieve this guidance, the bank will (1) strongly disburse credit at the beginning of the year (3M 2024 credit growth was 11.7%), (2) increase NOII by cross-selling services and products, (3) reduce provision expenses with 2024’s target for the NPL ratio at 0.9%. Additionally, management believes it will increase employees’ productivity, thereby bringing 2024F CIR to around 35% vs 37% in 2023. However, we believe that this is not enough to achieve the 49% YoY increase in 2024 PBT. It is possible that one-off income and/or the reversal of provision expenses may be necessary to reach this target.

LPB received shareholder approval to change its full name from “Lien Viet Post Joint Stock Commercial Bank” to “Loc Phat Vietnam Joint Stock Commercial Bank.” The bank explained that LPB is in the process of strong transformation, so the name change is intended to mark an important turning point in a new phase of development and new image orientation. This indicates that LPB will no longer be too dependent on the brand image of Vietnam Post – which supported LPB gaining market share in rural areas.

LPB received shareholder approval to purchase/receive the transfer/lease of assets. The BOD has complete authority to make decisions regarding the purchase or transfer of assets. If the value of the asset is larger than 20% of the charter capital of LPB, the BOD will take proactive measures to implement the decision and will subsequently report it at the nearest AGM. These assets will be used as operational headquarters, branches, transaction offices, and working areas for LPB employees. In our view, purchasing a large asset without shareholder approval is an unusual practice.   

We note that in the 2023 AGM, LPB was approved to purchase/receive the transfer of the building located at 210 Tran Quang Khai, Hoan Kiem Ward, Hanoi as the bank’s headquarters but this has not yet been implemented.

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