VPB_1Q21_Lower COF and improved CIR

HOLD – Underperform

Close 20 Apr 2021

Price                   VND 49,500
12M Target           VND 22,346
* Our TP is under review.

Event

VPB reported 1Q21 PATMI of VND3.2 tn (+11% QoQ/+38% YoY). The increase was due to lower cost of funds, lower operating cost, and a substantial jump in NPL recoveries.

Details

Loans reached VND301 tn (+3.6% YoY). Including corporate bonds, total credit reached VND332 tn (+2.8% YoY). 1Q21 net interest income was VND9.1 tn (+4% QoQ/+14% YoY), while

NIM on total average assets was 8.53% (+14bps QoQ/+20bps YoY).

Reduced cost of funds boosted NIM. VPB’s 1Q21 annualized COF decreased to 4.5% (-50bps QoQ/-1.6ppt YoY) in our calculation. CASA ratio increased to 17.0% (+1.4ppt QoQ/+4.8ppt YoY).

1Q21 net fee income was VND987 bn (-4% QoQ/ +42% YoY).

Other income (mostly NPL recoveries) increased by +9% QoQ /+75% YoY to reach VND789 bn.

Opex decreased by -6% QoQ/-21% YoY to reach VND2.6 tn, which was attributable to digitization. Adjusted cost to income (CIR) ratio decreased to 25.3% in 1Q21 (-2.5ppt QoQ/-9.5ppt YoY).

Provisioning jumped by +3% QoQ/+20% YoY to reach VND4.5 tn in 1Q21. Group NPLs were VND10.4 tn (+5% QoQ/+31% YoY) as at 1Q21, with the NPL increasing to 3.46% (+5bps QoQ/+43bps YoY). The parent bank NPL ratio decreased to 2.17% (-35bps QoQ/-48bps YoY).

LLR ratio was 44% (-1ppt QoQ/-8ppt YoY) in 1Q21.

Short-term capital used for medium and long-term loans was 29.9%, well below the SBV’s cap of 40%. LDR was 73.5% vs. the limit of 85%.

Capital levels continue to remain strong, with total CAR of nearly 12%, well above the minimum requirement of 8%.

For the complete report, please access here: VPB_1Q21_Express note

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