• We attended VIB’s AGM in HCMC on April 2, 2024. Management’s guidance implies their expectation for a recovery in business conditions to support top line growth and asset quality. The Q&A session focused on the bank’s core performance outlook and risk profile.
• VIB’s 2024F PBT guidance is VND12.0tn (USD486mn; +13% YoY) vs our forecast of VND12.2tn (USD493mn; +14% YoY). Q1 2024 PBT was VND2.6tn (-3% YoY), completing 21% of our full-year forecast. This result is in line with our expectation.   
• 2024 guidance includes credit growth of 20.0% YoY, funding (including customer deposits and valuable papers) growth of 21% YoY and an NPL ratio of below 3%. 2024G ROE and ROA are 24.0% and 2.2%, respectively. 
• VIB targets to control CAR at around 12% in the long term. 
• VIB also proposed (1) the second tranche of cash dividends of 6.5% (VND650/share) to be paid over the remainder of 2024F, (2) a stock dividend (431.3 million shares — 17% of outstanding shares), and (3) an ESOP issuing 11.1 million shares (equivalent to 0.44% of outstanding shares). We note that the first tranche of cash dividend (VND600/share) was paid in February. 

Credit growth improved MoM in Q1 2024. Though VIB’s credit balance slightly decreased in 2M 2024, VIB stated that Q1 2024 credit growth was nearly 1%, which is slightly higher than the 3M 2024 systemwide credit growth of around 0.5%-0.6%. The bank’s key products are still mortgages, auto loans, businesses loans (SME), and cards. As of 2023, SME loans were around VND40tn (equivalent to nearly 15% of the total loan book). Additionally, management believes in the high growth potential of the card segment. 

The interest rate has nearly reached the bottom. The bank stated that the deposit rate cuts by commercial banks are slowing down, and credit demand is picking up. Despite some potential pressure on the USD/VND rate, VIB expects interest rates will remain at a relatively low level for most of the year to support economic growth. 

NPL ratio ticked up in Q1 2024, but management expects an improvement in asset quality and debt collection in future quarters. VIB stated that the NPL ratio reported under Circular 11 increased to 2.4% in Q1 2024 (from 2.2% in 2023), which was partly due to the Tet holiday that constrained debt collection activities. Management expects to control this ratio to below 2% as of 2024F. VIB believes that with the loan ticket size of around VND500mn to VND3bn, the concentration risk of retail lending is much less than in corporate banking. The bank also observed improvements in debt collection in Q1 2024 and expects to record around VND1tn-VND1.5tn of recovery income from written-off bad debts in 2024F. 

Shareholders delegate the BOD to decide the specific FOL. The BOD is allowed to adjust the bank’s FOL without asking shareholders’ opinions before any adjustment; however, the FOL at any time is not allowed to exceed 30%, which is in line with the bank’s charter.

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