VPB – Robust earnings growth with QoQ improvement in asset quality; FEC’s recovery continues – Earnings Flash
  • 2024-10-29T00:00:00
  • Company Research

VPB released its 9M 2024 results with consolidated PBT of VND13.9tn (USD554mn; +67% YoY), achieving 77% of our full-year forecast. Q3 2024 consolidated PBT was VND5.2tn (+16% QoQ; +67% YoY). Overall, 9M 2024 profit tracked slightly ahead of our expectation due to lower-than-expected provision & operating expenses. We see potential upside to our current forecasts, pending a more extensive review. 

  • The parent bank’s 9M 2024 credit growth was 10.6% (loan growth of 13.9%). As of Q3 2024, the corporate bond balance at the parent bank decreased 60% vs 2023 and accounted for 1.7% of the total credit balance.  
  • 9M 2024 consolidated deposit growth was 7.6%. The Q3 2024 CASA ratio was 14.1% (-3.8 ppts QoQ; -2.7 ppts YoY). 
  • 9M 2024 consolidated NIM was 5.93% (+44 bps YoY) vs our full-year forecast of 6.03%. Q3 2024 consolidated NIM was 5.85% (-32 bps QoQ; +89 bps YoY). Additionally, VPB’s Q3 2024 LDR and short-term funding to medium and long-term lending were 82.3% and 24.6%, respectively.  
  • 9M 2024 NOII decreased 6% YoY and tracked in line with our expectation. Q3 2024 NOII of VND2.9tn (-22% QoQ; +20%YoY) was mainly driven by strong recovery from written-off bad debts. 
  • 9M 2024 CIR of 23.6% was among the low-end in our coverage and OPEX was slightly lower than our expectation (completing 70% of our full-year forecast), which was partly driven by a 3% YoY decrease in employee expenses.   
  • On a QoQ basis, both the NPL ratio and the Group 2 loans level decreased. The Q3 2024 consolidated NPL ratio was 4.81% (-27 bps QoQ; -93 bps YoY). Q3 2024 group 2 loans to gross loans was 7.06% (-77 bps QoQ; -97 bps YoY).   
  • We estimate that FEC’s Q3 2024 loan book was relatively flat in the last three quarters at around VND62tn (USD248mn; contributing around 10% to VPB’s Q3 2024 consolidated loan book). VPB stated that FEC’s disbursement activities have bounced back with 9M 2024 disbursement volume nearly equaling the amount in all of 2023. We estimate that FEC’s Q3 2024 NPL ratio was reduced in Q3 2024 to around 16% (vs ~20% in Q2 2024). Additionally, we estimate that FEC could have generated around more than VND300bn of profit in Q3 2024. FEC's recovery is also in line with our expectation (9M 2024 losses before tax of more than VND500bn vs our forecast for 2024F PBT of VND131bn). 
  • 9M 2024 provision expenses increased 13% YoY, completing 69% of our full-year forecast. Q3 2024 provision expenses decreased 26% QoQ. Despite a QoQ improvement in asset quality, VPB’s remaining high current bad debt metrics indicate to us potential upward pressure on credit costs in coming quarters. Q3 2024 consolidated LLR was 50.7% (+2.6 ppts QoQ; +8.0 ppts YoY).

Figure 1: VPB’s consolidated 9M 2024 results

VND bn 

 9M 2023 

 9M 2024 

 YoY 

 Q3 2023 

 Q3 2024 

 YoY 

 NII 

 27,133 

 35,887 

32.3%

 8,837 

 12,156 

37.6%

 Non-interest income 

 9,269 

 8,723 

-5.9%

 2,422 

 2,913 

20.3%

 OPEX 

 (10,296)

 (10,549)

2.5%

 (3,195)

 (3,751)

17.4%

 PPOP  

 26,106 

 34,062 

30.5%

 8,067 

 11,321 

40.3%

 Provision expenses 

 (17,827)

 (20,201)

13.3%

 (4,950)

 (6,125)

23.7%

 NPAT-MI     

 8,022 

 11,161 

39.1%

 2,428 

 4,173 

71.9%

 

 

 

 

 

 

 

 Loan growth** 

19.0%

12.2%

-6.8 ppts

6.7%

1.8%

-5.0 ppts

 Deposit growth**  

39.0%

7.6%

-31.5 ppts

8.7%

0.9%

-7.8 ppts

 

 

 

 

 

 

 

 NIM 

5.49%

5.93%

44 bps

4.95%

5.85%

89 bps

 Interest-earning asset yield 

11.36%

9.71%

-165 bps

10.83%

9.43%

-140 bps

 Cost of funds 

6.69%

4.53%

-216 bps

6.65%

4.26%

-239 bps

 CASA ratio* 

16.8%

14.1%

-2.7 ppts

16.8%

14.1%

-2.7 ppts

 CASA ratio plus term deposits in FX    

17.0%

14.5%

-2.5 ppts

17.0%

14.5%

-2.5 ppts

 CIR 

28.3%

23.6%

-4.6 ppts

28.4%

24.9%

-3.5 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

5.74%

4.81%

-93 bps

5.74%

4.81%

-93 bps

 Group 2 loans / Gross loans  

8.03%

7.06%

-97 bps

8.03%

7.06%

-97 bps

 Accrued interest / IEAs  

1.11%

0.99%

-12 bps

1.11%

0.99%

-12 bps

Source: VPB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q3 2023 and Q3 2024 loan and deposit growth is QoQ growth; 9M 2023 and 9M 2024 loan and deposit growth is 9M growth.

Figure 2: VPB’s standalone 9M 2024 results

VND bn 

 9M 2023 

 9M 2024 

 YoY 

 Q3 2023 

 Q3 2024 

 YoY 

 NII 

 18,555 

 26,364 

42.1%

 6,054 

 9,113 

50.5%

 Non-interest income 

 6,835 

 5,733 

-16.1%

 1,848 

 1,452 

-21.4%

 OPEX 

 (6,734)

 (7,717)

14.6%

 (2,068)

 (2,648)

28.0%

 PPOP  

 18,656 

 24,379 

30.7%

 5,837 

 7,921 

35.7%

 Provision expenses 

 (7,683)

 (11,327)

47.4%

 (2,761)

 (3,361)

21.7%

 NPAT-MI     

 8,779 

 10,462 

19.2%

 2,461 

 3,640 

47.9%

 

 

 

 

 

 

 

 Loan growth** 

25.5%

13.9%

-11.6 ppts

8.7%

2.4%

-6.3 ppts

 Deposit growth**  

37.5%

7.5%

-30.0 ppts

9.0%

0.8%

-8.2 ppts

 

 

 

 

 

 

 

 NIM 

4.06%

4.63%

56 bps

3.65%

4.65%

100 bps

 Interest-earning asset yield 

9.78%

8.30%

-148 bps

9.40%

8.18%

-122 bps

 Cost of funds 

6.38%

4.34%

-204 bps

6.39%

4.14%

-225 bps

 CASA ratio* 

17.2%

14.7%

-2.6 ppts

17.2%

14.7%

-2.6 ppts

 CASA ratio plus term deposits in FX    

17.5%

15.0%

-2.4 ppts

17.5%

15.0%

-2.4 ppts

 CIR 

26.5%

24.0%

-2.5 ppts

26.2%

25.1%

-1.1 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

3.96%

3.63%

-34 bps

3.96%

3.63%

-34 bps

 Group 2 loans / Gross loans  

7.59%

6.36%

-124 bps

7.59%

6.36%

-124 bps

 Accrued interest / IEAs  

1.06%

0.92%

-14 bps

1.06%

0.92%

-14 bps

Source: VPB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q3 2023 and Q3 2024 loan and deposit growth is QoQ growth; 9M 2023 and 9M 2024 loan and deposit growth is 9M growth.

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