HDB - Underperform Q4 2024 business results due to a sudden decline in asset quality
• Consolidated PBT for Q4/24 reached over VND 4 trillion, lower than the previous forecast (VND 4,600 billion), driven by (1) provision expenses up 68% QoQ and 47% YoY after a sharp rise in net NPL formation to VND 1,900 billion, (2) operating expenses up 20% QoQ and 35% YoY as the bank increased staff cost.• HDB's Q4/24 business results were generally unfavorable as (1) a sudden rebound in other income from credit activities offset the decline in average lending yield, and (2) asset quality unexpectedly deteriorated and could remain a concern in 2025 due to a sharp surge in group 2 loans. These developments pose downside risks to NIM projections and credit costs for 2025.
• For 2025, HDB targets continued growth in PBT (around 25% YoY) through expected higher credit growth compared to 2024, alongside continued control of NPL ratio under 2%.
• The target price for HDB shares is currently VND 24,300. We will update the 2025 projections and provide a more detailed assessment in upcoming reports.
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