CTG – Profit maintains positive growth
- In Q1/2024, total operating income reached VND 19,000 bn (+12% yoy; USD 754 mn). Net interest income saw a robust increase (+19.8% yoy) to VND 15,100 bn (USD 599 mn), offsetting a 10.6% yoy decline in non-interest income, which included (1) fee income at VND 1,700 bn (USD 67 mn; -11% yoy) and (2) “other incomes” (primarily debt recovery) at VND 778 bn (USD 31 mn; -23.7% yoy). However, fx trading emerged as a bright spot, recording a 14.6% yoy growth to VND 1,300 bn (USD 52 mn).
- The non-performing loan (NPL) ratio was controlled at 1.35%, compared to 1.13% at the end of 2023. Group 2 loans slightly increased by 4 basis points from the previous quarter to 1.59%
- For 2024, we estimate total operating income to grow to VND 83,000 bn (+18% yoy; USD 3,294 mn). We believe most of the bank's core business segments to thrive in 2024: (1) Net interest income is projected to rise by 20% yoy, driven by credit growth maintained at 15% and a continued recovery in net interest margin (NIM) to 3.04%; (2) Non-interest income is expected to grow by 12%, thanks to improved activities in payment services, trade finance, and debt recovery.
- We believe that asset quality improvements will accelerate CTG’s profit growth during 2024-2028, with a compound annual growth rate (CAGR) of 20%, and ROE improving over time to 19%, helping revalue the bank. Therefore, at the target price of VND 36,800 per share, corresponding to a forward P/B of 1.22 for 2024, we recommend to ACCUMULATE CTG.
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