LPB - Strong top line fuels earnings - Earnings Flash
  • 2024-07-22T00:00:00
  • Company Research

LPB released its H1 2024 results with TOI of VND9.3tn (USD365mn; +54.7% YoY) and PBT of VND5.9tn (USD232mn; +142.0% YoY), fulfilling 52% and 59% of our respective FY2024 forecasts. LPB’s Q2 2024 PBT continued recording strong growth at VND 3.0tn (+5.1% QoQ; +244.4% YoY), driven by net interest income of VND3.6tn (+48.8% YoY) and net other fee income of VND763bn (accounting for 93% of Q2 2024 NFI). Overall, LPB’s 1H 2024 earnings were in line with our expectations as the sharp increase in net other fee income offset lower-than-expected net other income in NOII. Overall, LPB’s 1H 2024 earnings were in line with our expectations as the sharp increase in net other fee income offset lower-than-expected net other income. We see no material changes to our earnings forecasts for LPB, pending a more extensive review.

  • 6M 2024 credit growth was 15.2% (vs credit quota of 16.0%), far surpassing the system-wide credit growth of 6.0%. Credit growth has been mainly driven by the corporate segment with growth in 6M 2024 of 27.1%, accounting for 64% of the total loan book. Additionally, the retail segment has witnessed negative growth of -3.9%. Q2 2024 credit growth was 3.2% QoQ. We note that LPB did not have a corporate bond balance as of Q2 2024.
  • 6M 2024 customer deposit growth accelerated to 21.6% vs our full-year forecast of 13.0% YoY. In Q2 2024, LPB’s CASA ratio decreased 62 bps QoQ but improved 2.8 ppts YoY to 10.1%.
  • H1 2024 NIM increased 34 bps YoY to 3.53% vs our full-year forecast of 3.46 %, which we attribute to the higher-than-expected decrease in COF than IEA yield. Q2 2024 NIM was 3.49% (-8.7 bps QoQ), which we mainly attribute to a stronger-than-expected surge in customer deposits (+10.0% QoQ).
  • H1 2024 NOII was VND2.2tn (+176.7% YoY), completing 55% of our full-year forecast. In addition, net fee income in 1H 2024 beat our expectation due to another abnormal net other fee income of VND763bn in Q2 2024 (1H 2024 was VND1,513tn, fulfilling 72% of our full-year forecast).
  • H1 2024 CIR decreased 18.7 ppts YoY to 28.2% vs our full-year forecast of 35.7% due to a 54.7% YoY increase in TOI outweighing a 7.1% YoY increase in OPEX.
  • Asset quality deteriorated QoQ with the NPL ratio increasing by 34 bps to 1.73% in Q2 2024 vs our full-year forecast of 1.30%. Additionally, the Group 2 loan ratio increased by 34 bps QoQ to 1.14%.
  • Annualized H1 2024 credit cost was 0.70% (vs 2.24% in 2023). In addition, LPB’s LLR was 77.1% in Q2 2024 vs 93.6% and 89.0% in 2023 and Q1 2024, respectively.

LPB’s consolidated H1 2024 results

VND bn 

 H1 2023 

 H1 2024 

 YoY 

 Q2 2023 

 Q2 2024 

 YoY 

 NII 

 5,224 

 7,109 

36.1%

 2,450 

 3,645 

48.8%

 Non-interest income 

 796 

 2,202 

176.7%

 436 

 1,041 

179.5%

 OPEX 

 (2,824)

 (2,623)

-7.1%

 (1,480)

 (1,247)

-15.8%

 PPOP  

 3,196 

 6,688 

109.3%

 1,406 

 3,439 

157.2%

 Provision expenses 

 (750)

 (769)

2.6%

 (526)

 (554)

5.4%

 NPAT-MI     

 1,952 

 4,720 

141.9%

 708 

 2,422 

242.0%

 

 

 Loan growth** 

7.6%

15.2%

7.6 ppts

4.7%

3.2%

-1.5 ppts

 Deposit growth**  

3.8%

21.4%

17.5 ppts

-1.4%

10.0%

11.4 ppts

 

 NIM 

3.19%

3.53%

34 bps

2.96%

3.49%

53 bps

 Interest-earning asset yield 

9.50%

8.04%

-146 bps

9.62%

7.76%

-186 bps

 Cost of funds 

6.88%

5.00%

-187 bps

7.24%

4.75%

-249 bps

 CASA ratio* 

7.3%

10.1%

2.8 ppts

7.3%

10.1%

2.8 ppts

 CASA ratio plus term deposits in FX    

7.3%

10.1%

2.8 ppts

7.3%

10.1%

2.8 ppts

 CIR 

46.9%

28.2%

-18.7 ppts

51.3%

25.6%

-25.6 ppts

 

 NPLs / Gross loans   

2.23%

1.73%

-50 bps

2.23%

1.73%

-50 bps

 Group 2 loans / Gross loans  

1.27%

1.14%

-12 bps

1.27%

1.14%

-12 bps

 Accrued interest / IEAs  

1.19%

1.40%

21 bps

1.19%

1.40%

21 bps

Source: LPB, Vietcap — *CASA volume included demand deposits and margin deposits; ** H1 2023 and H1 2024 loan and deposit growth is 6M growth.

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