VPB - Q3-2024 AM Update: Net Interest Income and Bad Debt Recovery Drive Total Operating Income; Asset Quality Begins to Improve
• Consolidated Pre-Tax Profit (PBT) for Q3-2024 reached VND 5.2 trillion (+66% YoY), falling about 7% below expectations. Cumulatively for the first nine months of 2024, consolidated PBT reached VND 13.9 trillion (+67% YoY), achieving 70% of the full-year forecast.• Key drivers contributing to PBT growth this quarter aligned well with expectations, including: (1) credit growth (8.7% consolidated and 10.4% for the parent bank); (2) a 90 bps YoY expansion in NIM to 5.8% from last year’s low base, along with positive bad debt recovery at both the parent bank (over VND 800 billion, +82% YoY) and FE Credit (VND 750 billion, triple the 2022-2023 average); (3) a 29% reduction in credit risk provisioning compared to the previous quarter, as VAMC bond repurchase pressures eased, resulting in a consolidated credit cost ratio of 1.0%, on par with the same period in 2023.
• Looking ahead to the end of the year, VPB anticipates credit growth of 15-17%, with potential for a slight increase in funding costs (due to accelerated credit growth by year-end), which could put NIM under pressure in Q4. While income from bad debt recovery is expected to remain positive, VPB remains cautious, forecasting a flat NPL ratio compared to Q3.
• Forecasts for 2024F-2025F and target price for VPB are under review and will be updated in the forthcoming report.
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