24/02/2025 - 15:00
Bank Sector_CAMLE 4Q24 update
TCB supplanted VCB to claim 1st place in our CAMEL framework TCB’s asset quality score improved, with NPL ratio down -17bp QoQ/-4bp YoY and LLR ratio up by +11ppt QoQ/+12ppt YoY to 114%.
VCB’s earnings score decreased slightly due to modest 2024 PATMI growth of just +2.4% YoY. NIM decreased by -15bp YoY as VCB cut loan rates to support borrowers in line with SBV policy. But potential further loan rate cuts in support of borrowers in 2025 should be lower than those of 2024, suggesting reduced potential for NIM erosion this year. Thus, we think VCB will soon regain its No.1 spot in our CAMEL rankings.
CTG jumped to 5th place on improved earnings. CTG’s net other income (we believe mostly NPL recoveries) grew by +71% YoY in 4Q24 and +47% YoY in full-year 2024. Provisioning dropped by -45% YoY in 4Q24.
Sector 2024 PATMI growth was 16% YoY, broadly driven by increased net interest income (+14% YoY) and net other income (mostly NPL recoveries) (+41% YoY). The 8 banks under our coverage posted an average PATMI growth of 21% YoY. The latter figure was boosted by VPB’s soaring PATMI (+57% YoY), which was backed by the recovery of FE Credit; FEC posted net profit for 3 consecutive quarters (2Q-4Q24) including PBT of VND949 bn (+3.5x QoQ/+4.6x YoY) in 4Q24.
Improved asset quality. The sector’s NPL ratio decreased to 1.92% (-34bp QoQ/-1bp YoY) in 4Q24, and the aggregate loan loss reserve (LLR) ratio improved sequentially to 91% (+8ppt QoQ/-3ppt YoY). Concerns about the VND110tn of real estate developer bonds maturing in 2025 are reasonable; but mitigating factors include stronger property sector ROIC and balance sheets, and our expectation of a property market upcycle from 2H25, when most of this paper is due.
Top picks: ACB and VCB. TCB has been among our top picks since Dec 24 but is now nearing our target price. Thus, we recommend to shift focus to MBB and VPB for greater share price upside amid the expected real estate upcycle starting from 2H25.
For the complete report, please access here: Bank Sector_Update_4Q24_Back in Action
Analyst: Tanh Tran, tanh.tran@yuanta.com.vn
