LPB – Strong NOII drives surprising Q4 2023 earnings growth – Earnings Flash
  • 2024-01-19T00:00:00
  • Company Research

LPB released its 2023 results with TOI of VND15.6tn (USD646mn; +10.3% YoY) and bottom-line net profit of VND5.6tn (USD230mn; +23.5% YoY), fulfilling 121% and 141% of our respective FY2023 forecasts. LPB’s Q4 2023 NPAT was VND2.6tn (+165% QoQ; +294% YoY). The bank’s results beat our expectations, which we attribute partly to (1) higher-than-expected fee income that could have been driven by a higher-than-expected upfront banca fee, (2) higher-than-expected NIM, and (3) lower-than-expected NPL formation. We see a slight upside to our earnings forecasts for LPB, pending a more extensive review. 

  • 2023 loan growth was 17.0% YoY, and Q4 2023 loan growth was 4.5% QoQ. We note that LPB did not have a corporate bond balance as of Q4 2023.  

  • 2023 customer deposit growth was 10.0% YoY vs our full-year forecast of 11.0% YoY. In Q4 2023, LPB’s CASA ratio improved better than our anticipation to 9.7% (+3.4 ppts QoQ and +0.9 ppts YoY).  

  • 2023 NIM was 3.24% (-73 bps YoY), which was slightly ahead of our expectation of 3.15%. Q4 2023 NIM increased 63 bps QoQ thanks to a 20-bp QoQ increase in IEA yield and a 36-bp QoQ decrease in COF.  

  • 2023 NOII was VND4.4tn (+94.8% YoY), completing 202% of our full year forecast — including our assumption for an upfront bancassurance fee. Strong NOII growth was mainly driven by (1) a 115% YoY increase in pure NFI, (2) 42x YoY increase in gains from FX trading from a low base, and (3) a 72.6% YoY increase in net other income. 

  • 2023 CIR decreased 0.6 ppts YoY to 36.9% due to a 10.3% YoY increase in TOI that outweighed an 8.5% YoY increase in OPEX.  

  • Asset quality improved QoQ with the NPL ratio grossed up write-off rate decreasing by 37 bps to 2.88% in Q4 2023 vs our forecast of 3.30%. We note that the balance of NPLs to grossed up write-offs decreased 7.3% QoQ in Q4 2023. 

  • 2023 credit cost was 0.56% (vs 0.55% in 2022). In addition, LPB’s LLR was 93.8% (+26 ppts QoQ; -48 ppts YoY). 

LPB’s consolidated 2023 results 

VND bn 

2022 

2023 

YoY 

Q4 2022 

Q4 2023 

YoY 

NII 

11,900 

11,203 

-5.9% 

2,772 

3,346 

20.7% 

Non-interest income 

2,270 

4,422 

94.8% 

909 

3,145 

246.0% 

OPEX 

(5,307) 

(5,760) 

8.5% 

(1,507) 

(1,595) 

5.8% 

PPOP 

8,863 

9,865 

11.3% 

2,174 

4,896 

125.2% 

Provision expenses 

(3,174) 

(2,826) 

-11.0% 

(1,306) 

(1,544) 

18.1% 

NPAT-MI 

4,510 

5,572 

23.5% 

668 

2,628 

293.5% 

  

  

  

  

  

  

  

Loan growth** 

12.7% 

17.0% 

4.3 ppts 

3.3% 

4.5% 

1.2 ppts 

Deposit growth** 

19.8% 

10.0% 

-9.8 ppts 

11.6% 

3.9% 

-7.7 ppts 

  

  

  

  

  

  

  

NIM 

3.97% 

3.24% 

-73 bps 

3.55% 

3.70% 

15 bps 

Interest-earning asset yield 

8.40% 

9.33% 

93 bps 

8.59% 

9.64% 

105 bps 

Cost of funds 

4.81% 

6.76% 

195 bps 

5.52% 

6.50% 

98 bps 

CASA ratio* 

8.8% 

9.7% 

0.9 ppts 

8.8% 

9.7% 

0.9 ppts 

CASA ratio plus term deposits in FX 

10.1% 

9.8% 

-0.3 ppts 

10.1% 

9.8% 

-0.3 ppts 

CIR 

37.5% 

36.9% 

-0.6 ppts 

40.9% 

24.6% 

-16.3 ppts 

  

  

  

  

  

  

  

NPLs / Gross loans 

1.46% 

1.34% 

-12 bps 

1.46% 

1.34% 

-12 bps 

Group 2 loans / Gross loans 

1.51% 

1.13% 

-38 bps 

1.51% 

1.13% 

-38 bps 

Accrued interest / IEAs 

1.30% 

1.35% 

5 bps 

1.30% 

1.35% 

5 bps 

Source: LPB, Vietcap — *CASA volume includes 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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