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VIB released its H1 2024 results with TOI of VND10.4tn (USD410 mn; +0.6% YoY), and PBT of VND4.6tn (USD182mn; -18.4% YoY), achieving 42% and 38% of our respective FY2024 forecasts. These results imply Q2 2024 PBT of VND2.1tn (-16.0% QoQ, -28.7% YoY). The H1 2024 YoY decrease in the bottom line was mainly driven by (1) an 8.3% drop in NII, (2) a 35.8% YoY rise in provision expenses, and (3) a 5.2 ppts spike in CIR, which was offset by a 49.7% surge in NOII. We see potential downside risk to our earnings forecasts for VIB, pending a fuller review.
- 6M 2024 credit growth was 4.6% vs the credit quota of 16.1%. In 6M 2024, 82% of VIB’s lending portfolio was comprised of retail customers, in which 53% were mortgages, 21% were business loans, 13% were auto loans, and 13% were cards and other consumer loans. Additionally, corporate bonds accounted for only 0.2% of VIB’s credit exposure and were issued by manufacturing and services companies. Per VIB, the remaining ~11% growth in 2H 2024 is achievable. In the upcoming period, the bank expects the SME & corporate segments to grow strongly.
- 6M 2024 customer deposit growth was 4.7% vs our full-year forecast of 14.0% YoY. In Q2 2024, VIB’s CASA ratio both improved by 1.5 ppts QoQ and 4.4 ppts YoY to 14.9%.
- H1 2024 NIM decreased 110 bps YoY to 3.84% vs our full-year forecast of 4.54%, which we attribute to a 310 bps YoY decrease in the IEA yield that outweighed a 214 bps YoY drop in COF. Q2 2024 NIM contracted by 20 bps QoQ to 3.77%, mainly because the bank supported clients via lower lending rates to increase credit demand as well as expand the SME segment. According to VIB, the average O/N interbank borrowing rate during Q2 2024 was around 4%-4.5%, which has put pressure on the COF. In 2H 2024, the bank expects the interbank rate to decline to alleviate this pressure. VIB expects the NIM to be maintained at around 4.0%- 4.2% for 2024.
- H1 2024 NOII was VND2.4tn (+49.7% YoY), completing 44% of our full-year forecast. The surge in NOII was mainly due to (1) a robust recovery income from written-off bad debt of VND499bn (+ 177% YoY) and (2) a VND315bn gain from FX trading activities vs a VND18 bn loss in H1 2023.
- H1 2024 CIR rose 5.2 ppts to 35.5% vs our full-year forecast of 31.2% amid a strong YoY increase in employee expenses, operating expenses for management, and investment in fixed assets. VIB stated that the bank has received licenses from the State Bank of Vietnam (SBV) for 14 new branches up until now. However, the bank expects that the CIR will gradually decrease in H2 2024.
- NPL ratio inched up QoQ, while the Group 2 loans level decreased QoQ. The Q2 2024 NPL ratio increased 6 bps QoQ to 3.66% vs our full-year forecast of 2.94%. Restructured loans under Circular 02 over gross loans was 0.2% vs 0.3% in Q1 2024. The bank expects the NPL ratio to gradually decrease toward the end of the year and expects to maintain the NPL ratio (under the Circular 11) below 2.2% for 2024. In addition, the Group 2 loan ratio dropped by 119 bps QoQ to 4.46% in Q2 2024.
- H1 2024 provision expenses of VND2.1tn witnessed a 35.8% surge YoY due to VIB’s accelerated provisioning and writing off bad debts to manage the NPL ratio. Q2 2024 annualized write-off rate over the gross loan was 2.07% (vs 0.63% in Q1 2024).
- Regarding CBA’s divestment plan, VIB shared that the bank is working closely with CBA on the divestment pipeline. As per management, VIB will seek a new strategic partner when the time is right but currently has no specific schedule for this.
VIB’s consolidated H1 2024 results
VND bn | H1 2023 | H1 2024 | YoY | Q2 2023 | Q2 2024 | YoY |
NII | 8,706 | 7,981 | -8.3% | 4,402 | 3,946 | -10.4% |
Non-interest income | 1,588 | 2,376 | 49.7% | 962 | 1,094 | 13.7% |
OPEX | (3,123) | (3,677) | 17.7% | (1,556) | (1,806) | 16.1% |
PPOP | 7,170 | 6,680 | -6.8% | 3,808 | 3,233 | -15.1% |
Provision expenses | (1,528) | (2,075) | 35.8% | (860) | (1,130) | 31.4% |
NPAT-MI | 4,514 | 5,526 | 22.4% | 2,358 | 3,525 | 49.5% |
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Loan growth** | 1.2% | 4.7% | 3.5 ppts | 2.4% | 4.2% | 1.8 ppts |
Deposit growth** | 2.6% | 4.7% | 2.1 ppts | 3.0% | 5.7% | 2.7 ppts |
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NIM | 4.94% | 3.84% | -110 bps | 4.87% | 3.77% | -110 bps |
Interest-earning asset yield | 10.48% | 7.38% | -310 bps | 10.40% | 7.34% | -307 bps |
Cost of funds | 6.11% | 3.97% | -214 bps | 6.11% | 4.00% | -211 bps |
CASA ratio* | 12.1% | 14.87% | 2.7 ppts | 12.1% | 14.9% | 2.7 ppts |
CASA ratio plus term deposits in FX | 14.6% | 19.08% | 4.4 ppts | 14.6% | 19.1% | 4.4 ppts |
CIR | 30.3% | 35.50% | 5.2 ppts | 29.0% | 35.8% | 6.8 ppts |
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NPLs / Gross loans | 3.63% | 3.66% | 2 bps | 3.63% | 3.66% | 2 bps |
Group 2 loans / Gross loans | 6.42% | 4.46% | -196 bps | 6.42% | 4.46% | -196 bps |
Accrued interest / IEAs | 0.93% | 0.24% | -68 bps | 0.93% | 0.24% | -68 bps |
Source: VIB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q2 2023 and Q2 2024 loan and deposit growth is QoQ growth; H1 2023 and H1 2024 loan and deposit growth is 6M growth.
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