CTG – Notes from 2024 EGM and Q3-2024 & 2024 Forecasts Update
• On October 17, CTG successfully held an Extraordinary General Shareholders' Meeting, during which two additional members were elected to the Board of Directors for the 2024-2029 term.• For Q3-2024, we forecast Net Interest Income (NII)/Total Operating Income/Consolidated Profit Before Tax (PBT) to grow by 19% YoY/12% YoY/42% YoY, respectively. The key expected drivers for PBT growth include (1) a 5basispoint (bps) expansion in NIM from a low base in the same period, (2) credit growth of approximately 16% YoY (or 9% year-to-date), and (3) a 7% YoY reduction in credit risk provisioning costs. Credit costs are also expected to decrease by 12% compared to the previous quarter, thanks to the partial reversal of provisions set aside for non-performing loans (NPLs) in Q2-2024, which have since been controlled and reclassified as standard loans. As of the end of Q3-2024, the NPL ratio before CIC adjustments stood at 1.4%.
• For 9M-2024, PBT is estimated to reach VND 19.9 trillion, up 14% YoY, fulfilling 67% of the current 2024F PBT forecast.
• For the full-year 2024F projection, we have revised our forecast downward by 5%, reducing the expected PBT to VND 27.9 trillion (+12% YoY) from the previous estimate of VND 29.5 trillion (+18% YoY). This adjustment is based on: (1) a slight reduction in consolidated credit growth for the year from 14.4% to 13.8%, as the credit growth recovery remains unstable, and (2) a 7 bps decline in NIM to 2.92%.
• We have adjusted CTG's target price downward by 3% to VND 40,400 per share, reflecting the revisions in our updated forecast. With a total expected return of 11% based on the closing price as of October 18, 2024, we maintain our ACCUMULATE recommendation for CTG.
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