BID released its Q1 2025 results with TOI of VND17.9tn (USD689mn; +4.2% YoY) and PBT of VND7.4tn (USD285mn; +0.3% YoY), fulfilling 20% and 21% of our respective FY2025 forecasts. Overall, BID’s results tracked below our expectations primarily due to weaker-than-expected NIM, consistent with the results we saw at most banks under our coverage that have reported. We see slight downside to our current earnings forecasts, pending a more extensive review.

• Q1 2025 credit growth reached 2.5%, which trailed system-wide credit growth of 3.9%. The sectors that drove credit growth in Q1 2025 included the services sector (+25.1% QoQ) and the manufacturing & processing sector (+3.1% QoQ).
• Q1 2025 customer deposits growth was 1.2%. The Q1 2025 CASA ratio was 19.0% (+0.2 ppts YoY, -1.2 ppts QoQ).  
• Q1 2025 NII of BID grew 3.0% YoY, driven by strong credit growth partially offset by a large decline in NIM. Q1 2025 NIM continued to compress to 2.02% (-36 bps YoY, -37 bps QoQ), driven primarily by a sizeable decline in interest-earning asset yield (-79 bps YoY, -46 bps QoQ) partially offset by an improvement in cost of funds (-48bps YoY, -9bps QoQ). We suspect the decline in NIM was caused by (1) intense price competition due to the ongoing imbalance between supply and demand of credit, and (2) deterioration in asset quality.  
• Asset quality weakened with an NPL ratio of 1.89% (+39 bps YoY, +48 bps QoQ) in Q1 2025 vs our year-end 2025 forecast of 1.30%. The group 2 loan ratio was 1.85% (-21 bps YoY, +19 bps QoQ) in Q1 2025. BID wrote off VND4.0tn in Q1 2025 - equivalent to a write-off rate over gross loans of 0.19%. 
• Q1 2025 annualized credit cost was 0.87% vs 0.98% in Q1 2024. In addition, BID’s Q1 2025 LLR declined QoQ to 97% vs 134% in the previous quarter. 
• Q1 2025 NOII was VND4.0tn (+8.9% YoY), completing 19% of our full-year forecast.
• Q1 2025 CIR increased 1.6 ppts YoY to 33.0% vs our full-year forecast of 34.2% due to a 9.5% YoY increase in OPEX outweighing a 4.2% YoY increase in TOI.

BID’s consolidated Q1 2025 results 

Source: BID, Vietcap — *CASA volume includes demand deposits and margin deposits; ** Q1 2024 and Q1 2025 loan and deposit growth is QoQ growth.

• We attended BID’s AGM in Hanoi on April 26, 2025. The main agenda was to (1) propose 2025 business targets, (2) approve a 3.84% share issuance in the form of private placement and/or public offering, and (3) approve stock dividend plans. The Q&A section focused on BID’s YTD performance, 2025 business outlook, and its assessment of the impact from potential US tariffs.
• Shareholders approved the bank’s 2025 business guidance, which includes (1) credit growth of around 16% YoY (according to the directives of the SBV during each period), (2) funding growth in accordance with credit growth, and (3) PBT according to approval by State agencies. 
• Shareholders approved a plan to issue up to 269.8 million shares (3.84% of total shares outstanding) in the form of private placement and/or public offering. Private placement will be offered to institutional investors while for public offerings, both individual investors and organizations can participate.
• Shareholders approved (1) a 7.1% issuance of shares to increase capital from charter capital supplementary reserve fund, (2) a 19.9% stock dividend using 2023 retained earnings, and (3) a 22.6% stock dividend using 2024 retained earnings, subject to approval by State agencies.

BID expects there will be impact from the trade war on bank profits but does not expect it to lead to negative profit growth. The imposition of tariffs could lead to slower credit growth, deposit mobilization, and profit. Credit demand may shrink, and deposit inflows, especially from FDI enterprises, could decline. Asset quality may worsen as exports slow, possibly resulting in a rise in NPLs. Profit will also be affected as provisioning costs increase. However, to have an accurate assessment of the trade war's impact, the bank will need to wait for the negotiation results over the next 75 days.

According to BID's preliminary estimates, around 15% of its total loan portfolio may be impacted by tariff measures. The most affected customer groups include steel production, plastics, mechanics, seafood, footwear, textiles, logistics, and industrial real estate. The first-hit businesses will be exporters to the US. While most electronics exporters are FDI enterprises, supporting industries may be indirectly affected. 

BID is assessing specific difficulties at the client level to support businesses. The bank has instructed its branches to work directly with clients. Profit is expected to decline somewhat even if tariff negotiations are successful. BID has established a task force to review and take inventory of all banking activities that might be affected. The bank's branches continue to support businesses in finding new markets, improving transparency of material sources, reducing costs, and restructuring financial sources appropriately. At present, it is still unclear whether negotiations will succeed, so BID is crafting scenarios cautiously. 

The bank expects that 2025 provisioning expenses will be roughly similar to the 2024 level. However, with projected 16% credit growth this year, provisioning expense as a percentage of total credit may decrease. In addition, given the unfavorable US tariff policies, BID forecasts a slight increase in NPLs this year. NIM is expected to remain stable or decrease slightly. The specific profit target for 2025 is still under development and depends on the Government's negotiation outcomes.

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