11/11/2022 - 07:15
CAMEL_3Q22_Update
Earnings will largely depend on provisioning
VCB, TCB, ACB, and MBB continue to rank as top 4 on our 3Q22 CAMEL scores. For these banks, asset quality remains solid, as demonstrated by relatively low NPL ratios and high LLR ratios; and earnings growth remains strong (ACB: +71% YoY, MBB: +61% YoY, and VCB: +32% YoY).
STB its ranking to 8th place from 9th place in 2Q22 as its restructuring progress is nearly completed. We estimate STB’s total net NPA ratio decreased to 3.2% as at 3Q22 (-40bps QoQ/-3.7ppt YoY). Its NPL ratio has decreased to below 1.0%, and the bank has continued to build up a stronger credit provision buffer with a 3Q22 LLR ratio of 154%.
Sector aggregate PATMI was VND48 tn (-5% QoQ/+54% YoY) in 3Q22, largely driven by increased net interest income and fees.
Sector net interest income (Net-II) jumped by +5% QoQ/+31% YoY to reach VND111 tn. 9M22 net-II was VND315 tn (+22% YoY). Loans to customers grew by 12.2% YTD in 3Q22. Sector NIM on average total assets was 3.71% (+7bps QoQ/+35bps YoY) in 3Q22.
We expect 4Q22 NIM compression due to 1) rising funding costs and constrained loan yields and 2) reduced cap on ST funding to MLT loans.
Net fee income was VND14.4 tn (-7% QoQ/+34% YoY) for the group. 9M22 net fee income was VND45 tn (+18% YoY).
Total provisioning was VND31 tn (+3% QoQ/-1% YoY) across the listed banks. 9M22 provisioning was VND86 tn (-1% YoY). We expect bank earnings in 4Q22 to depend largely on provisioning policies. High-LLR banks are better positioned to outperform in terms of PATMI and ROE.
Valuations are very attractive at the current median level of 1.1x 2022E P/B with 2022E ROE of 20% (Bloomberg Consensus). Our top picks are MBB (BUY), ACB (BUY), and VCB (BUY), underlining our preference for quality.
For the complete report, please access here: Banks_CAMEL_3Q22_Updated
Analyst: Tanh Tran, tanh.tran@yuanta.com.vn
