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Chinh Nguyen
  • Chinh Nguyen

VCB - Pioneering Recovery Initiatives

VCB reported total operating income (TOI) of VND 17.4 trillion (+9.4% YoY) in Q2/23, driven by a growth in net interest income (NII) reaching VND 14 trillion (+9.6% YoY) combined with non-interest income of VND 3.4 trillion (+8.6% YoY). Effective cost control measures led to a decrease in the cost-to-income ratio (TTM) by 100 bps to 30.6%, and a 7.2% YoY reduction in provision expenses, resulting in a maintained PBT at a high level of 9.2 trillion VND (+25% YoY). For the first 6 months of 2023...

Thao Nguyen
  • Thao Nguyen

Result Update Report: VCB - Resilient amidst uncertainties

Macroeconomic conditions might be tougher in 2023, risk of real estate and corporate bond market remains even though some bottlenecks have been released to protect the banking system. However, we expect VCB to be able to weather the storm amid uncertainties and maintain sustainable profit growth. In the medium term, Circular 26 tends to benefit SoCBs on the funding side which also be the short-term catalyst. In addition, the private placement  in 2024, CAR is expected to expand by roughly 200 to...

Thao Nguyen
  • Thao Nguyen

VCB – Healthy growth prospects

PBT reached VND 7.6 tn in 3Q22 (+32% yoy), mainly coming from interest-earning assets expansion and NIM improvement. NII and TOI were recorded at VND 13.7 tn and 16.7 tn, respectively. The bank has utilized almost fully credit growth quota granted of 9M22 to make up a 17.3% growth ytd. There has been a certain gap between credit and deposit of the overall system as deposit growth reached 5.4% ytd as of 3Q22. CASA ratio declined to 33.8% after peaking at the historical high of 34.5% in 2Q, yet...

Lam Nguyen ... (+2)
  • Lam Nguyen
  • Tung Do

Vietnam Strategy: July – Short-term opportunities arise amid earnings ...

Industries (and their sub-sectors) with good Q2 2022 profit growth prospects such as Consumer Goods (Fishery, F&B), Consumer Services (Retail), IT, Utilities (Electricity, Water), Materials (Chemical), Industry (Logistics) continued to witness improved liquidity and were relatively safe havens in June. This reaffirms our expectation of a deep divergence of money flow in the market. Although the positive price trend of stocks in the above-mentioned sectors may continue until Q2 earnings are re...

Thanh Nguyen
  • Thanh Nguyen

Vietcombank: Lasting revenue pressures and positive cost cuts in the f...

VCB maintained its growth momentum in Q1 22 with moderate earnings results (15% yoy), driven by robust net interest income and net profit margin. Non-interest income was impacted by the bancassurance fee bonus, zero transaction fee package and high comparison base. Credit cost margin was a minor growth factor despite the reversals of provisions for interbank lending. We expect the provisioning level in the next quarter to be sustained and become the leading growth factor. NIM will be maintai...

Son Tran
  • Son Tran

Analyst Pin-board VCB – Lasting revenue pressures and positive cost cu...

VCB maintained its growth momentum in 1Q22 with moderate earnings results (15% YoY), driven by robust net interest income and net profit margin. Non-interest income was impacted by the bancassurance fee bonus, zero transaction fee package and high comparison base. Credit cost margin was a minor growth factor despite the reversals of provisions for interbank lending. We expect the provisioning level in the next quarter to be sustained and become the leading growth factor. NIM will be maintain...

Kiet Tran ... (+3)
  • Kiet Tran
  • Lam Nguyen
  • Tung Do

Vietnam Strategy: March 2022 – Timing is key

The Russia-Ukraine war and US and European sanctions on Russia have raised concerns about the risk of a global supply chain disruption, especially since Russia and Ukraine are two major exporting countries in terms of metal products, fertilisers, agricultural products and oil and gas. This has pushed prices of commodities, which have been on a significant rally during the two years of the pandemic, once again back to its peak. Speculation on commodity prices has led to a rapid and strong incr...

Thanh Nguyen
  • Thanh Nguyen

Vietcombank: Q4 21 earnings beat expectations; raise target price

VCB's Q4 21 earnings beat our forecasts by 11% (VND8.1tn versus VND7.3tn in PBT) due to extensive cost reduction. Total operating income was somewhat near expectations with a 1% deviation, while provisions were higher than our projections given the deterioration of an inter-bank loan. For the whole year, VCB reported VND27,372bn (US$1.2bn, 19% yoy) in PBT, exceeding our estimates by 3%. We revise up our 2022-2023 projections as a result of the better-than-expected figures. We make major chan...

Son Tran
  • Son Tran

Analyst Pin-board VCB – Beating expectations, preparing for the privat...

4Q21 earnings beat our forecasts by 11% (VND 8.1 trillion versus VND 7.3 trillion in PBT) due to extensive cost reduction. Total operating income was somewhat up to expectations with a 1% deviation, while provisions were higher than our projections given the deterioration of an interbank loan. For the whole year, VCB reported VND 27,372 bn (USD 1.2 bn, 19% YoY) in PBT, exceeding our estimates by 3%. We revise up our 2022-2023 projections as a result of the better-than-expected figures...

Kiet Tran ... (+3)
  • Kiet Tran
  • Lam Nguyen
  • Tung Do

Vietnam Strategy: August 2021 – Picking a safe haven at a time of unce...

The outperformance of smaller market cap stocks compared with the returns on VN Index in July was generally in line with our expectations. As such, reducing the weight on our recommendations on some large cap stocks in steel and banking sectors, namely HPG, VCB, ACB, in the last month has helped lessen the impact of the market downturn among our coverage. Overall, 10 out of our 11 Buy recommendations have outperformed the VN Index in the last month. Robust Q2 21 earnings growth and the market...

Thanh Nguyen
  • Thanh Nguyen

Vietcombank: Short-term headwinds outweighed by strengthened buffer

We maintain our positive view and rank VCB among our top picks at this uncertain time. Healthy lending, resilient buffers, competitive funding costs, reputable brand, diversified customer base, leading position in trade financing, international settlements and foreign exchange are robust rationales. In the medium term, bad debt recovery and low growth of provision expenses are expected to be new earnings drivers. In the longer term, we evaluate its significant valuation premium on the sector ...

Son Tran
  • Son Tran

VCB - Short-term headwinds are outweighed by strengthened buffer

We maintain a positive view and rank VCB among our top choices in this uncertain time. Healthy lending, resilient buffers, competitive funding costs, reputable brand, diversified customer base, leading position in trade financing, international settlements and foreign exchange are robust rationales. In the medium term, bad debt recovery and low growth of provision expenses are expected to be new earnings drivers. In the longer term, we evaluate its significant valuation premium on the sector mul...

Thanh Nguyen
  • Thanh Nguyen

Vietnam banking sector: Update on credit market share

The credit market has seen changes in the last five years. Some of those are expected to be sustained in the future. Most of the state-owned banks underperformed the sector in the last five years on credit expansion. Private banks on the other hand sustained high credit growth and diversified into corporate bonds when loan demand weakened. However, this does not reflect a change in risk appetite yet. The gap between private banks and state-owned banks will keep narrowing, but the pace will s...

Thanh Nguyen
  • Thanh Nguyen

Vietnam banks: Credit growth expectation for 2021

Covid has had a strong impact on the economy by negatively affecting loan demand, financial capability of customers and the quality of assets. The State Bank of Vietnam has directed credit institutions to support the economy by measures such as lowering interest rates, restructuring debt, rescheduling payment period, exemptions and maintaining debt group. These timely actions at the beginning 2020 — when the pandemic broke out — helped maintain positive economic growth and promises a recovery...

Joint Stock Commercial Bank for Foreign Trade of Vietnam: 1 director s...

A director at Joint Stock Commercial Bank for Foreign Trade of Vietnam sold 15,000 shares at 0.000VND and the significance rating of the trade was 61/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's d...

Thanh Nguyen
  • Thanh Nguyen

Vietcombank: Short-term pressure does not affect competitiveness

We maintain our positive view on VCB and our rationale is based on its: healthy lending, strong balance sheet, sustainable low funding cost, reputable brand, diversified customer base, sustainable market share in international settlements and foreign exchange. We anticipate an insignificant loss of market share in individual loans, domestic settlement and credit cards due to competition. In the longer term, we evaluate its significant valuation premium on average multiples as justifiable. Wi...

Anh Nguyen
  • Anh Nguyen

Vietnam banks: Service income temporarily hampered; long-term potentia...

Covid-19 pandemic has led to a slowdown, even compression, of banks’ service income in H1 20 During H1 20, many listed banks witnessed weak performance of service income growth, which stayed at only 9.9% yoy (much lower than 42.1% in H1 19). Service income contributed to 10.6% of operating income (similar to H1 19). The main reasons for the slowdown include (1) weak credit demand, which had hampered banking services, particularly insurance, trade service and FX gains, (2) net payment fee slow....

Anh Nguyen
  • Anh Nguyen

Vietnam: Central bank urges more timely implementation of forbearance ...

In this report, we discuss further the State Bank of Vietnam’s (SBV) guidance for banks with updates from a recent meeting between the government and the public on 9 May. This is a follow-up on our report on the impact of Covid-19 on banks from the SBV’s order to reduce lending rates or tolerate loans to those economically hit by the pandemic (Circular 01/2020/TTNHNN). Giving priority to economic recovery. The government has identified that the need to restart economy activities and growth i...

Anh Nguyen
  • Anh Nguyen

Vietcombank: 1Q2019 – Modest income growth; declining earnings due t...

Operating income increased by 4.4% YoY with modest growth in both NII and service income, while other activities (except FX trading) tended to decline. The 6.3% YoY growth in NII was the result of quarterly NIM expansion of 22bps YoY (to 3.3%) and a 2.8% YTD growth in total credit. Service income only expanded by 5.4% YoY. FX income saw growth of 19.3% YoY while income from other activities declined by 10.9% YoY and securities trading incurred a loss of VND54bn (USD 1.2mn). TOI growth was off...

Anh Nguyen
  • Anh Nguyen

Vietnam: The impact of Covid-19 on banks

In accordance with the State Bank of Vietnam's (SBV) order to lower lending rates for customers since February, banks have set aside a considerable amount of credit to provide new loans with preferential interest rates to support businesses. Banks now provide an average discount of 0.5-1.5ppts/year on lending rate for new loans to customers affected by the pandemic; in fact, some banks have even cut rates more deeply (TPB 1.5-2.5ppts; HDB 2-4.5ppt; VCB 2-5ppt). Banks are also offering prefere...

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