TPB - Despite weak credit growth, NIM and asset quality significantly improve - Earnings Flash
  • 2024-07-30T00:00:00
  • Company Research

TPB released its results for H1 2024 with TOI of VND8.9tn (USD356mn; +17.5% YoY) and PBT of VND3.7n (USD149mn; +10.3% YoY), achieving 54.8% and 51.4% of our full-year forecasts, respectively. H1 2024 bottom-line results were broadly in line with our projections due to the improvement in NIM and the well-controlled operating expenses outweighing the surge in provision expenses. On a QoQ basis, Q2 2024 PBT was VND1.9tn (+4.3% QoQ). We see no material changes to our earnings forecast for TPB, pending a fuller review.

  • H1 2024 credit growth was 4.2% compared to a decline of 3.0% in Q1 2024. TPB’s credit growth was weaker than system-wide growth of 6% in H1 2024 partly due to (1) the bank selling all loans related to a real estate developer to another institution and (2) weak credit demand from retail customers. A notable trend was that the bank started to increase its exposure to corporate bonds in Q2 2024 with the balance increasing to VND12.4tn vs VND9.3tn in Q1 2024. 
  • TPB’s H1 2024 deposits decreased by 2.5% and the total funding (including customer deposits, valuable papers, and interbank funding) was flat compared to Q4 2023. However, TPB’s regulated LDR remained at a low level of 67.8% - per our estimation. The Q2 2024 CASA ratio decreased by 2.3 ppts QoQ to 22.2% vs our full-year forecast of 23.2%.
  • H1 2024 NIM increased 43 bps YoY to 3.97% due to (1) deposit growth being lower than credit growth, (2) a significant improvement in the CASA ratio, and (3) slower NPLs formation.
  • H1 2024 NOII increased by 6.1% YoY and achieved 55% of our full-year forecast. This is due to (1) the pure NFI increasing by 10.7% YoY and (2) investment income increasing 58.4% YoY, outweighing the weak performance in FX trading activities and recovery income. 
  • H1 2024 OPEX decreased 12.8% YoY, which contributed to a strong improvement in the H1 2024 CIR at 34.4% (-11.9 ppts YoY).
  • H1 2024 provision expenses were recorded at VND2.1tn (+211.8% YoY) but Q2 2024 provision expenses decreased 19.6% QoQ. Additionally, we believe TPB’s asset quality is trending up with the Q2 2024 (1) NPL ratio at 2.06% (-17 bps QoQ), (2) Group 2/gross loans at 2.61% (-7 bps QoQ), and (3) LLR at 66.0% (+ 5.7 ppts QoQ).

TPB’s consolidated H1 2024 results

VND bn 

 H1 2023 

 H1 2024 

 YoY 

 Q2 2023 

 Q2 2024 

 YoY 

 NII 

5,466

6,660

21.8%

2,545

3,233

27.0%

 Non-interest income 

2,110

2,240

6.1%

1,372

983

-28.3%

 OPEX 

(3,510)

(3,059)

-12.8%

(1,931)

(1,383)

-28.4%

 PPOP  

4,067

5,841

43.6%

1,987

2,833

42.6%

 Provision expenses 

(683)

(2,130)

211.8%

(368)

(949)

157.8%

 NPAT-MI     

2,706

2,986

10.3%

1,293

1,524

17.8%

 

 

 

 

 

 

 

 Loan growth** 

10.0%

4.0%

-6.0 ppts

2.7%

6.1%

3.4 ppts

 Deposit growth**  

2.1%

-2.5%

-4.6 ppts

-1.0%

5.8%

6.8 ppts

 

 

 

 

 

 

 

 NIM 

3.54%

3.97%

43 bps

3.21%

3.86%

65 bps

 Interest-earning asset yield 

9.00%

7.60%

-140 bps

8.86%

7.45%

-141 bps

 Cost of funds 

5.68%

3.84%

-184 bps

5.87%

3.77%

-210 bps

 CASA ratio* 

16.4%

22.2%

5.8 ppts

16.4%

22.2%

5.8 ppts

 CASA ratio plus term deposits in FX    

17.8%

25.1%

7.3 ppts

17.8%

25.1%

7.3 ppts

 CIR 

46.3%

34.4%

-11.9 ppts

49.3%

32.8%

-16.5 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

2.21%

2.06%

-15 bps

2.21%

2.06%

-15 bps

 Group 2 loans / Gross loans  

3.51%

2.61%

-90 bps

3.51%

2.61%

-90 bps

 Accrued interest / IEAs  

1.03%

1.06%

3 bps

1.03%

1.06%

3 bps

Source: TPB, 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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