VCB released 2022 results with TOI of VND68.0tn (USD2.9bn; +20.1% YoY) and NPAT-MI of VND29.9tn (USD1.3bn; +36.4% YoY), achieving 104.4% and 112.3% of our FY2022 forecasts, respectively. The increase in NPAT-MI was mainly due to (1) a 25.6% YoY increase in NII, (2) 31.9% YoY increase in gains from FX trading and (3) 19.5% YoY decrease in provision expenses. Q4 2022 NPAT-MI was VND9.9tn (+63.7% QoQ and +53.9% YoY) mainly thanks to strong NII growth and lower provision expenses. We see potential upside to our earnings forecast for VCB, pending a fuller review.

2022 credit growth was the highest since 2017. VCB reported 2022 credit growth of 18.8% YoY, in which loans to customers increased 19.2% YoY and the corporate bond balance decreased 8.1% YoY. Meanwhile, 2022 deposit growth was lower at 9.5% YoY, but regulated LDR remained at a safe level of 78% at end-2022 vs 79% at end-2021 (per our estimation) thanks to high interbank funding sources. On a quarterly basis, there was a faster pace of deposit growth relative to credit growth — of 3.9% QoQ and 1.3% QoQ, respectively — similar to the trend for most of banks that have released earnings so far.

Strong 2022 NII growth backed by NIM expansion and high credit growth. VCB reported a 25.6% YoY increase in 2022 NII that we attribute to strong credit growth and a 23-bp YoY increase in NIM. On a QoQ basis, Q4 2022 NIM increased 9 bps QoQ following a 40-bp QoQ increase in the IEA yield that outweighed a 38-bp QoQ increase in COF. We observe a 1-ppt QoQ and 1.8-ppt YoY drops in the CASA ratio to 33.9% in Q4 2022; however, we view the magnitude of the decrease as minimal.

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