VIB – Profit Growth Potential in 2H-2024 Looks Promising with Reduction in Provisioning Pressure
• Q2-2024 Pre-Tax Profit decreased by 29% YoY, weaker than previously anticipated (-17% YoY) due to slower-than-expected income from bad debt recoveries, while operating and provisioning expenses slightly exceeded forecasts.• Credit growth reached 4.6%, lower than the industry average of 6%, with the growth rate in personal loans remaining slow (+1.2% YTD), while corporate lending was emphasized more, achieving a growth of 22% YTD.
• We have revised down our 2024 projections for Total Operating Income and PBT by 1% and 2%, respectively, to VND 22.4 trillion (+1% YoY) and VND 11.5 trillion (+7% YoY) after adjusting the NIM down 10 bps to 4.1% and the credit cost ratio down 20 bps to 1.3%.
• With PBT growth implied at 36% YoY in 2H-2024, we maintain a BUY recommendation for VIB with a target price of VND 23,800 per share, adjusted down by 5% from the previous target price. The total expected return (including a 10% cash dividend) is 23%. This target price implies a 2024F/2025F P/B valuation of 1.6x/1.4x.
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