VPB – Strong NII growth, lower credit costs support earnings; bad debts metrics remain high – Earnings Flash
  • 2024-04-25T00:00:00
  • Company Research

VPB released its Q1 2024 results with consolidated PBT of VND4.2tn (USD168mn; +64% YoY) which achieves 25% of our full-year forecast. Q1 2024 parent bank’s PBT was VND4.9tn (USD197mn; +20% YoY). Overall, the profit tracked in line with our expectations mainly due to (1) a strong rebound in NII and (2) a YoY decrease in provision expenses. However, FEC's Q1 performance was quite weak vs its AGM guidance. We estimate that FEC could have recorded a loss of around VND1tn in Q1 2024 after breaking even and made some minor profit in H2 2023. 

  • The parent bank’s Q1 2024 credit growth (including customer loans and corporate bonds) was 2.2% (loan growth of 3.0%). As of Q1 2024, the corporate bond balance at the parent bank decreased 14% vs 2023 to VND20.2tn (USD809mn), accounting for 3.8% of the total credit balance.  
  • Q1 2024 consolidated deposit growth was 3.0%, which was driven by retail customer deposits. In addition, the consolidated CASA ratio was 14.4% (flat YoY and -3 ppts QoQ).
  • Q1 2024 consolidated NIM was 5.81% (6 bps QoQ) vs our full-year forecast of 6.08%. We expect NIM to improve in the rest of 2024F from a low base. We note that VPB’s NIM was distorted in Q3 2023 last year due to new equity issuance.  
  • VPB’s Q1 2024 VAMC bond balances were flat QoQ at VND4.3tn (0.5% of total assets) We recall that VPB recorded VAMC bonds in Q4 2023 for the first time since 2018 amid high bad debt ratios.
  • Q1 2024 NOII decreased 26% YoY and tracked slightly behind our expectation due to a loss in trading investment and weaker-than-expected recovery income from written-off bad debts at both the parent bank and FEC. 
  • Q1 2024 CIR of 25.8% was among the low-end in our coverage and OPEX was in line with our expectation. 
  • On a QoQ basis, the NPL ratio slightly decreased, but Group 2 loans spiked. The Q1 2024 consolidated NPL ratio was 4.84% (-17 bps QoQ; -141 bps YoY).  Group 2 loans to gross loans were 8.30% (+141 bps QoQ; +9 bps YoY), which was mainly contributed by retail loans (i.e., mortgages). In addition, Q1 2024 consolidated write-offs to gross loans decreased 2.2 ppts YoY to 3.6%.
  • We estimate that FEC’s Q1 2024 loan book was relatively flat QoQ and decreased 6% YoY. VPB stated that FEC’s disbursement activities have bounced back in Q1 2024 with disbursement volume increasing 29% vs 2023’s average. Though FEC’s bad debt metrics reduced QoQ, they remain at a relatively high level, which signals persisting high pressure on credit costs. 
  • Q1 2024 provision expenses decreased 9.8% YoY and completed 19% of our full-year forecast. VPB expects 2024F provision expenses to be flat or slightly decrease from a high base in 2023 and Q1 provision expenses seem to be on track with the bank’s guidance. However, VPB’s current bad debt metrics indicate a modest improvement in asset quality to us and we expect potential upward pressure on credit costs in coming quarters. 

 Figure 1: VPB’s consolidated Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

9,534

11,323

18.8%

Non-interest income

2,825

2,087

-26.1%

OPEX

(3,423)

(3,467)

1.3%

PPOP

8,936

9,944

11.3%

Provision expenses

(6,386)

(5,762)

-9.8%

NPAT-MI

1,650

3,142

90.4%

 

 

 

 

Loan growth**

5.7%

2.9%

-2.8 ppts

Deposit growth**

9.2%

3.0%

-6.2 ppts

 

 

 

 

NIM

6.25%

5.81%

-44 bps

Interest-earning asset yield

11.82%

9.93%

-190 bps

Cost of funds

6.41%

4.93%

-148 bps

CASA ratio*

14.2%

14.4%

0.2 ppts

CASA ratio plus term deposits in FX

14.6%

14.6%

0.0 ppts

CIR

27.7%

25.8%

-1.8 ppts

 

 

 

 

NPLs / Gross loans

6.24%

4.84%

-141 bps

Group 2 loans / Gross loans

8.22%

8.30%

9 bps

Accrued interest / IEAs

1.36%

1.14%

-22 bps

Source: VPB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q1 2023 and Q1 2024 loan and deposit growth is QoQ growth.

 Figure 2: VPB’s standalone Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY

NII

6,579

8,222

25.0%

Non-interest income

1,963

1,604

-18.3%

OPEX

(1,996)

(2,419)

21.2%

PPOP

6,546

7,407

13.2%

Provision expenses

(2,429)

(2,486)

2.3%

NPAT-MI

3,293

3,936

19.5%

 

 

 

 

Loan growth**

9.2%

3.0%

-6.2 ppts

Deposit growth**

7.8%

3.0%

-4.9 ppts

 

 

 

 

NIM

4.72%

4.50%

-22 bps

Interest-earning asset yield

10.12%

8.51%

-161 bps

Cost of funds

6.07%

4.72%

-135 bps

CASA ratio*

14.5%

14.6%

0.2 ppts

CASA ratio plus term deposits in FX

14.9%

14.8%

0.0 ppts

CIR

23.4%

24.6%

1.3 ppts

 

 

 

 

NPLs / Gross loans

3.42%

3.31%

-11 bps

Group 2 loans / Gross loans

7.46%

7.80%

33 bps

Accrued interest / IEAs

1.38%

1.09%

-28 bps

Source: VPB, 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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