TPB – NIM improves despite weak credit growth in Q1 2024– Earning Flash
  • 2024-04-27T00:00:00
  • Company Research

TPB released its results for Q1 2024 with TOI of VND4.7tn (USD187mn; +28% YoY) and NPAT of VND1.5n (USD58mn; +3.5% YoY), achieving 28.9% and 25.2% of our full-year forecasts, respectively. On a QoQ basis, Q1 2024 NPAT increased 196% QoQ, which shows a strong recovery after five quarters of continuously decreasing earnings. We see no material changes to our earnings forecast for TPB, pending a fuller review.

  • 3M 2024 credit growth was weak at -3.0%. The corporate bonds balance decreased 23.5% QoQ. The weak credit growth is due to 1) weak credit demand of retail customers and 2) TPB sold some of the large corporate loans to other institutions – per the bank’s disclosure at its AGM. 
  • TPB’s 3M 2024 deposits decreased by 8.4%, in which, the deposits of corporate clients decreased by 17%. However, we expect an immaterial risk for TPB as the total funding (including customer deposits, valuable papers, and interbank funding) was flat QoQ. The Q1 2024 CASA ratio improved by 1.8 ppts QoQ to 24.5%, higher than our expectation of 23.2% due to deposit rates achieving their lowest levels over the last 20 years. 
  • Q1 2024 NIM achieved 4.14% (+36 bps YoY) due to (1) deposit growth being lower than credit growth, (2) a significant improvement in CASA, and (3) slower NPLs formation.
  • Q1 2024 NOII significantly increased by 70.3% YoY due to (1) the pure NFI increasing by 39.8% YoY and (2) investment income achieving VND475bn in Q1 2024 vs VND34bn in Q1 2023. This outweighs the weak performance in FX trading activities and recovery income. We attribute strong pure NFI growth in Q1 2024 to TPB’s robust customer acquisition activities, which supported the settlement service fees +40.4% YoY.
  • Q1 2024 OPEX increased only 6.1% YoY, which contributed to a strong improvement in the Q1 2024 CIR at 35.8% (-7.4 ppts YoY).
  • Q1 2024 provision expenses were recorded at VND1.2tn (+274.9% YoY & -40.1% QoQ). The annualized credit cost in Q1 2024 was 2.3%, the same as the annualized write-off rate at 2.3% in Q1 2024, which indicates the bank’s effort to clean up its balance sheet. 
  • Asset quality slightly improved on a QoQ basis with Q1 2024 NPL gross-up for write-off rate at 2.81% (-71 bps QoQ) and Group 2/gross loans at 2.69% (-12 bps QoQ). 

TPB’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

          2,921 

          3,427 

17.3%

Non-interest income

             738 

          1,257 

70.3%

OPEX

         (1,579)

         (1,676)

6.1%

PPOP

          2,080 

          3,008 

44.6%

Provision expenses

            (315)

         (1,181)

274.9%

NPAT-MI

          1,413 

          1,462 

3.5%

 

 

 

 

Loan growth**

7.3%

-2.2%

-9.5 ppts

Deposit growth**

3.1%

-8.4%

-11.5 ppts

 

 

 

 

NIM

3.78%

4.14%

36 bps

Interest-earning asset yield

8.94%

7.88%

-106 bps

Cost of funds

5.37%

3.93%

-144 bps

CASA ratio*

14.2%

24.5%

10.3 ppts

CASA ratio plus term deposits in FX

15.8%

25.4%

9.6 ppts

CIR

43.2%

35.8%

-7.4 ppts

 

 

 

 

NPLs / Gross loans

1.45%

2.23%

78 bps

Group 2 loans / Gross loans

4.02%

2.69%

-133 bps

Accrued interest / IEAs

1.07%

1.07%

0 bps

Source: TPB, 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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