BID – Q4-2024 AM note and 2024F-25F Update
• 9M-2024 PBT grew by 12% YoY, driven by an 8% YoY reduction in provisioning expenses, while total operating income recorded a modest increase of 4%. Credit growth remained stable (9.9% for 9M-2024), supported by a robust recovery in the retail segment. However, the net interest margin (NIM, TTM) declined approximately 20 basis points YoY to 2.46%, impacted by various factors such as the implementation of preferential loan packages, reduced interest rates for customers affected by Typhoon Yagi, and rising non-performing loans (NPLs). Among non-interest income drivers, bad debt recoveries stood out, reaching VND 4.5 trillion in 9M-2024, up 35% YoY.• BIDV expects to fully utilize its credit growth quota of 14.04% approved by the State Bank of Vietnam (SBV) (current credit growth stands at approximately 11%) and has no plans to raise deposit interest rates through year-end. The bank believes that NPLs peaked in Q3 and aims to control the NPL ratio at under 1.4% by year-end (Q3-2024: 1.7%). BIDV targets a 10% PBT growth for the year, implying a 6% YoY increase in Q4-2024 PBT to approximately VND 8.4 trillion.
• BIDV is awaiting approval from the SBV for its capital increase proposal and is working with potential investors to complete the first tranche of the private placement (2.9% of charter capital) by Q1-2025. The transaction value has not been disclosed. Additionally, BIDV is seeking approval from the Ministry of Finance to increase its charter capital using retained earnings (a stock dividend issuance at a 21% ratio), expected to be completed in early 2025.
• We have revised our 2024 PBT forecast upwards by 2% to VND 30.4 trillion (+11% YoY). For 2025, we project total operating income to grow by 14%, driven primarily by a 15% increase in net interest income (assuming 13.6% credit growth and flat NIM). PBT is expected to grow by 15%, reaching nearly VND 35 trillion.
• We maintain our target price (TP) at VND 54,700 per share, representing an expected return of 18% as of November 27 and implying a 2025F P/B valuation of 2.2x.
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