OCB – 2024 Business Results Show Sharp Decline and Weakened Asset Quality
• OCB's 9M-2024 pre-tax profit (PBT) reached VND 2.5 trillion (-35% YoY), completing only 30% of the initial full-year PBT target of VND 6.8 trillion. The sharp decline was mainly due to a 54% YoY drop in non-interest income and a surge in provisioning expenses (+98.7% YoY).• Q4-2024 PBT is projected to reach VND 614 billion, a significant improvement from Q3's result of VND 440 billion and a strong increase compared to the same period last year (VND 220 billion). Net interest income will be the main growth driver, with expected credit growth of 14.7% YTD in Q4 (a sharp rise from Q3), though NIM will narrow to 2.9%. Meanwhile, provisioning expenses are expected to ease, declining 21.5% YoY, with Q4's credit cost ratio at 0.4% (Q4-2023: 0.8%).
• OCB's 2024F PBT is estimated at VND 3.1 trillion, down 23.5% YoY due to the following factors: (1) a loss of VND 170 billion from investment securities trading, (2) a significant increase in provisioning expenses (+36.3%), and (3) continued weakness in service income (-29.1%).
• We will update the valuation results in the next report.
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