STB - NPL surging, lower credit costs pressure in Q2 2024 - Earnings Flash
  • 2024-07-30T00:00:00
  • Company Research

STB released its H1 2024 results with TOI of VND14.0tn (USD561mn; +3.6% YoY) and PBT of VND5.3tn (USD214mn; +12.3% YoY), fulfilling 41% and 47% of our respective FY2024 forecasts. Bottom-line growth was broadly in line with our projection due to lower-than-expected provision expenses outweighing weak pure NFI and recovery income. On a QoQ basis, Q2 2024 PBT increased 3%. We see no material changes to our earnings forecasts for STB, pending a more extensive review.

  • H1 2024 credit growth was 7%, slightly higher than the system-wide level of around 6%. Most of the loans were distributed to terms of less than one year. 
  • 6M 2024 customer deposit growth was slightly higher than credit growth of 7.5%. In Q2 2024, STB’s CASA ratio slightly improved to 18.8% (+1.8 ppts YoY & +3 bps QoQ). 
  • H1 2024 NIM decreased 33bps YoY to 3.93% vs our full-year forecast of 4.01%. On a QoQ basis, after two quarters of improving in NIM, STB’s Q2 2024 NIM decreased 10 bps. We attribute this to the weak credit demand of retail customers and strong competition among banks which led to STB’s asset yield decreasing more than its funding cost. 
  • H1 2024 NOII was VND2.0tn, flat YoY and fulfilling 26% of our full-year forecast. We believe this is due to (1) continual weak bancassurance sales and (2) low recovery income from written-off bad debts. We expect STB to record around VND2tn recovery income from the proceed of the sale of debts related to Phong Phu Industrial Park in H2 2024. 
  • H1 2024 CIR surged to 53.8% (+6.0 ppts YoY) compared to our full-year forecast of 44.8%.  We expect that the stronger recovery income in H2 2024 will support a reduction in STB’s 2024F CIR. 
  • STB’s Q2 2024 asset quality deteriorated QoQ with the NPL ratio reaching 2.43% (+64 bps YoY & +15 bps QoQ) and Group 5 loans witnessing a jump of 33.9% QoQ. However, a positive sign was STB’s Group 2/gross loans decreasing 15 bps QoQ, therefore, we believe STB’s NPL ratio will lower in H2 2024. 
  • STB’s net VAMC balance as of Q2 2024 was VND623bn vs VND1.8tn in Q4 2023. STB did not book additional provision expenses for VAMC which reduced the credit costs for the bank in H1 2024 vs H1 2023.  
  • H1 2024 provision expenses decreased 50.7% YoY with the annualized credit cost at 0.44% (vs 0.76% in 2023). In addition, STB’s LLR was 69.7% in Q2 2024 (-7.4 ppts YoY & -2.8 ppts QoQ).

STB’s consolidated H1 2024 results

VND bn 

 H1 2023 

 H1 2024 

 YoY 

 Q2 2023 

 Q2 2024 

 YoY 

 NII 

11,588

12,067

4.1%

5,751

6,117

6.3%

 Non-interest income 

1,950

1,962

0.6%

986

1,038

5.3%

 OPEX 

(6,465)

(7,544)

16.7%

(3,049)

(4,001)

31.2%

 PPOP  

7,072

6,485

-8.3%

3,688

3,153

-14.5%

 Provision expenses 

(2,317)

(1,143)

-50.7%

(1,316)

(465)

-64.6%

 NPAT-MI     

3,825

4,288

12.1%

1,925

2,177

13.1%

 

 

 

 

 

 

 

 Loan growth** 

5.0%

7.0%

2.0 ppts

2.7%

3.2%

0.5 ppts

 Deposit growth**  

10.3%

7.5%

-2.8 ppts

4.8%

3.0%

-1.8 ppts

 

 

 

 

 

 

 

 NIM 

4.26%

3.93%

-33 bps

4.18%

3.74%

-44 bps

 Interest-earning asset yield 

10.51%

8.31%

-220 bps

10.65%

7.58%

-307 bps

 Cost of funds 

6.42%

4.46%

-196 bps

6.62%

4.03%

-259 bps

 CASA ratio* 

17.4%

18.8%

1.4 ppts

17.0%

18.8%

1.8 ppts

 CASA ratio plus term deposits in FX    

18.7%

20.4%

1.7 ppts

18.7%

20.4%

1.7 ppts

 CIR 

47.8%

53.8%

6.0 ppts

45.3%

55.9%

10.6 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

1.79%

2.43%

64 bps

1.79%

2.43%

64 bps

 Group 2 loans / Gross loans  

1.16%

0.70%

-46 bps

1.16%

0.70%

-46 bps

 Accrued interest / IEAs  

0.96%

0.82%

-14 bps

0.96%

0.82%

-14 bps

Source: STB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q2 2023 and Q2 2024 loan and deposit growth is QoQ growth; H1 2023 and H1 2024 loan and deposit growth is 6M growth.

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