MSB 3Q-2024 Update: Foreign exchange trading activities caused 3Q-2024 PBT to drop sharply by 28% YoY but should drive the profit growth in the next quarter, in addition to lower credit cost
3Q-2024 PBT reached VND 1.2 trillion, down sharply by -43.9% QoQ and -27.6% YoY due to (1) NIM (quarterly) narrowing by -20bps QoQ and -60bps YoY as funding cost increased, and (2) foreign exchange trading recorded a loss of VND 131 billion.• Accumulated 9M-2024 PBT to VND 4.9 trillion, completing 72% of the 2024 plan (VND 6.8 trillion). ROA and ROE ratios reached 1.5% and 13.2%, respectively.
• Regarding asset quality, net bad debt formation (before write-off) has decreased in the last two quarters, which is a positive signal. Outstanding loans of group 2, 3 and 4 all decreased compared to the previous quarter, which may continue to support the improving trend of asset quality in the short term. The bad debt ratio decreased slightly to 2.0% compared to 2.1% in 2Q. MSB also expects that bad debt has peaked and the bad debt ratio will be kept at 2% at the end of 2024.
• MSB maintains its full-year PBT plan at VND 6.8 trillion (+16.6 YoY). This profit target implies that 4Q-2024 PBT will reach VND 1.9 trillion (up 56.6% QoQ and 213.0% YoY) driven by: (1) Profit from foreign exchange trading activities returning to profitability in 4Q based on expectations that exchange rates will continue to be anchored high, (2) Credit costs will cool down as MSB is on a trend of improving asset quality, (3) Profit from bad debt recovery of about VND 1 trillion.
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