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VPB – Expectation of Maintaining Strong Profit Growth in Q3 2024

• For Q3-2024, we estimate consolidated pre-tax profit (PBT) to grow 80% YoY, reaching VND 5.6 trillion. This is based on expectations of a significant 90 basis points YoY increase in consolidated net interest margin (NIM) to 5.8%, as VPB's NIM hit its lowest point in the same period of 2023. Consolidated credit growth is projected at 17.4% YoY (or 9.5% year-to-date). Consequently, net interest and total operating income are expected to grow 37% YoY and 38% YoY, respectively, providing VPB with additional resources to increase provisions in the year's second half prudently. At the same time, VPB is expected to record high-profit growth, benefiting from a low base in 2023. Provision expenses are estimated to rise 22% YoY to approximately VND 6 trillion but will decrease by about 28% from the previous quarter, as VPB repurchased VAMC bonds in the prior quarter, which temporarily increased provisioning pressure.
• For the first nine months of 2024, consolidated PBT is projected to reach VND 14.3 trillion, up 72% YoY, achieving 62% of the full-year PBT target. Of this, the bank’s standalone PBT for the nine months is expected to reach VND 13.7 trillion (up 25% YoY), fulfilling 66% of the full-year target. Regarding FE Credit, we forecast the consumer finance company to report a profit of more than VND 200 billion in Q3-2024, bringing cumulative PBT to negative VND 108 billion (full-year target of VND 1.2 trillion).
• For the 2024F forecast, we have revised down our consolidated PBT estimate by 8% from our previous projection to VND 19.0 trillion (+73% YoY) from VND 20.7 trillion (+88% YoY). This adjustment is based on a downward revision of the full-year consolidated credit growth assumption from 23% to 16%, and an increase in the credit cost ratio from 3.3% to 3.6%, reflecting our expectation that VPB will adopt a more cautious approach in managing risks for the remainder of the year.
• We have slightly reduced VPB's target price by 3% to VND 22,500 per share. With an assumed cash dividend payout ratio of 10% over the next 12 months (corresponding to a payout ratio of 54%), the expected total return is 17%. We reiterate our recommendation to ACCUMULATE VPB.