VPB_1Q21 Analyst Meeting

HOLD – Underperform

Close 23 Apr 2021
Price                       VND 51,000
12M Target           VND 22,346
* Our TP is under review.

Event

VPB held an analyst meeting on Apr 23, 2021 to discuss its 1Q21 results. Below are some key additional highlights from the meeting.  Please see our report on VPB’s 1Q21 results for more details on the bank’s results, which had been released previously.

Details

The bank reported total credit of VND332 tn (+2.8% YTD). Credit at VPB standalone was VND266 tn (3.6% YTD), contributed by SMEs (14%), retail (39%), and corporate & others (47%).

1Q21 PBT was VND4.0 tn (+11% QoQ/+38% YoY), of which 80% came from VPB standalone and 20% from FE Credit (vs. 29% in 2020)

The bank is confident in its asset quality, especially restructured loans. Management said that only 2.6% of restructured loans became NPLs, (i.e., VND500 bn). The bank also said that two-thirds of customers are back to normal after restructuring.

On Circular No. 03/2021/TT-NHNN, management estimates that the impact of the Circular 03 to its NPL, provision and profit is insignificant. The total estimated provision impact is about VND1,120 bn (0.4% of 1Q21 total loans) over 3 years. As such, VPB will have to provide an additional of VND340 bn in 2021E, VND330 bn in 2022E, and VND450 bn in 2023E.

The bank’s LLR ratio (including write-offs) was 60.5% as at 1Q21.

FE Credit divestment. Management said that they expect to complete a deal in 2Q21. However, but they didn’t disclose any details as the deal it is still under discussion.

Dividend is likely not on the table. VPB said that the dividend policy will be discussed in the upcoming AGM on Apr 29. However, they indicated that VPB is unlikely to pay a cash dividend this year.

Our view

Maintain HOLD-Underperform. The stock trades at 2.0x 2021E P/B vs. the sector median of 1.6x, which we attribute mostly to the expectation of the FE Credit IPO. The contribution from FE Credit to the Group’s profit has been trending down from 43% in 2019 to 29% in 2020 and only 20% in 1Q21.

The unsecured consumer business continues to remain a key operational concern. However, at this point our target price may overstate the downside risk, and our valuation is now under review.

For the complete report, please access here: VPB_1Q21 Analyst Meeting

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn