STB – Low credit costs counteract weak NOII – Earnings Flash
  • 2024-05-02T00:00:00
  • Company Research

STB released its Q1 2024 results with TOI of VND6.9tn (USD275mn; +1.1% YoY) and bottom-line net profit of VND2.1tn (USD85mn; +11.1% YoY), fulfilling 20% and 23% of our respective FY2024 forecasts. The bottom-line growth was broadly in line with our projection thanks to lower-than-expected provision expenses outweighing weakness in bancassurance income and recovery income. On a QoQ basis, Q1 2024 NPAT decreased 7%. We see no material change to our earnings forecasts for STB, pending a more extensive review.

  • 3M 2024 credit growth was 3.7%, higher than the system-wide level of around 1% and the same as ACB. Most of the loans were distributed to terms of less than one year. We note that both STB and ACB have a large proportion of loan balance to households’ business customers.
  • 3M 2024 customer deposit growth was slightly higher than credit growth at 4.4%. In Q1 2024, STB’s CASA ratio was flat YoY and QoQ at 18.5%. 
  • Q1 2024 NIM rose 5 bps QoQ to 3.85% vs our full-year forecast of 4.03%. STB’s NIM has improved for two quarters after hitting the bottom of 3.38% in Q3 2023. We attribute this to STB’s customer deposits continuing to roll over to lower deposit rates.
  • Q1 2024 NOII was VND924bn (-14.1% QoQ and -4.1% YoY), fulfilling 11% of our full-year forecast. We attribute this to (1) continual weak bancassurance sales and (2) low recovery income from written-off bad debts. However, we expect STB to record stronger recovery income due to the successfully sold debts related to Phong Phu Industrial Park. 
  • Q1 2024 CIR was flat QoQ and YoY at 51.5%. We believe that the stronger improvement in NIM and NOII over the remainder of 2024 will support 2024F CIR to reduce to 43.5%. 
  • Q1 2024 asset quality slightly deteriorated QoQ with Group 2/gross loans increasing 13 bps QoQ to 0.85% and the NPL ratio was 2.28%, the same as the NPL ratio in Q4 2023. STB recorded minimal write-offs in 2023 and Q1 2024. STB still has a net VAMC balance of VND1.4tn as of Q1 2024 vs VND1.8tn in Q4 2023.
  • Q1 2024 provision expenses decreased 32% YoY with the annualized credit cost at 0.54% (vs 0.80% in 2023). In addition, STB’s LLR was 72.5% in Q1 2024 (+3.7 ppts QoQ; -31.3 ppts YoY).

 

STB’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

          5,837 

          5,951 

2.0%

Non-interest income

         964 

         924 

-4.1%

OPEX

        (3,416)

        (3,543)

3.7%

PPOP

          3,384 

          3,332 

-1.5%

Provision expenses

        (1,002)

        (678)

-32.3%

NPAT-MI

          1,900 

          2,111 

11.1%

 

 

 

 

Loan growth**

2.2%

3.7%

1.5 ppts

Deposit growth**

5.3%

4.4%

-0.9 ppts

 

 

 

 

NIM

4.40%

3.85%

-55 bps

Interest-earning asset yield

10.48%

8.07%

-241 bps

Cost of funds

6.22%

4.41%

-181 bps

CASA ratio*

17.4%

18.5%

1.1 ppts

CASA ratio plus term deposits in FX

19.2%

20.2%

1.0 ppts

CIR

50.2%

51.5%

1.3 ppts

 

 

 

 

NPLs / Gross loans

1.19%

2.28%

109.0 bps

Group 2 loans / Gross loans

0.94%

0.85%

-9.0 bps

Accrued interest / IEAs

0.97%

0.87%

-10.0 bps

Source: STB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q1 2023 and Q1 2024 loan and deposit growth is QoQ growth.

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