ACB - Strong NPAT growth despite slowing credit demand - Earnings Flash

ACB released Q1 2023 results with TOI of VND7.9tn (USD337mn; +15.6% YoY) and bottom-line net profit of VND4.1tn (USD176mn; +25.8% YoY), achieving 23.3% and 27.6% of our FY2023 forecasts, respectively. The increase in NPAT was mainly due to (1) a 14.2% YoY increase in NII, (2) 21.0% YoY surge in NOII and (3) 8.4% YoY decrease in OPEX expenses, which outweighed provision expenses surging to VND256bn in Q1 2023 vs provision income of VND3bn in Q1 2022. Overall, ACB’s bottom line tracked slightly ahead of our expectations due to lower-than-expected OPEX and provision expenses. We see no material change to our earnings forecast, pending a more extensive review.  

ACB experienced relative flat credit growth in 3M 2023. ACB’s credit balance in Q1 2023 declined 0.6% QoQ vs system-wide credit growth of 2.1% QoQ. The bank shared that credit demand was weak in January and February but recovered 2.2% MoM in March. In addition, ACB’s weakened credit demand was due to (1) the economic slowdown and (2) seasonal behavior as credit demand from retail customers is typically low at the beginning of the year. We also believe the decline in ACB’s loan balance in Q1 2023 was partly because the bank was conservative in giving out new loans under in the uncertain environment. Q1 2023 customer deposit growth was 2.1% QoQ vs our full-year forecast of 11.0% YoY.

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