01/02/2021 - 14:06
TP upside (downside) -7%
Close 29 Jan 2021
Price VND 39,900
12M Target VND 37,300
BID reported 4Q20 PATMI of VND1.6 tn (-22% QoQ/-43% YoY) driven largely by increased provisioning. BID’s 2020 PATMI was VND7.1 tn (-14.7% YoY), fulfilling 74% of its full-year target and 69% of our forecast.
Loans increased by just 9% YoY to reach VND1,214 tn in 2020.
4Q20 net interest income was VND10.6 tn (+16% QoQ/+10% YoY).
NIM on total average assets was 2.83% in 4Q20 (+32bps QoQ/+20bps YoY), driven by lower funding costs.
4Q20 net fee income was VND1.6 tn (+16% QoQ/+28% YoY). Income from securities investment was +VND507 bn in 4Q20 (+27% QoQ/-37% YoY), and income from FX trading was VND486 bn (+11% QoQ/+16% YoY). Other income (which we believe is mostly loan loss recoveries) soared by 127% QoQ/+29% YoY to reach VND2.3 tn.
Provisioning increased by +22% QoQ/+93% YoY to reach VND7.0 tn in 4Q20, which was the main for the earnings miss. Provisioning in 2020 increased by 15% YoY to reach VND23.1 tn. The reported NPL ratio was 1.76% (-21bps QoQ/+1bps YoY) at 4Q20.
LLR ratio was 88% (+1.3ppt QoQ/+13.3ppt YoY) as at 4Q20.
Prudent approach. BID increased provisioning significantly in 4Q20, which dented earnings. We view this positively given the delayed impact of restructured loans and potential for increased NPL formation in 2021E.
Valuation is still high, in our view. BID trades at 1.8x 2021E P/B vs. the sector median of 1.3x despite its low 2021E ROE of 12% compared to the sector’s median of about 16%. BID benefits from its large scale and SOE status, but we don’t see it as comparable to VCB (BUY) in terms of quality. Thus, we maintain our SELL recommendation.
For the complete report, please access here: BID_4Q20_Express note
Analyst: Tanh Tran, firstname.lastname@example.org