HDB held an analyst meeting on May 14. Overall the bank’s Q1 earnings exceeded our expectations, supported by (1) much stronger-than-expected NOII (driven by fee income and potentially strong bad debt recovery) and (2) a lower-than-expected CIR. However, asset quality deteriorated QoQ, with Group 2 loans remaining elevated compared to peers and a low provisioning buffer that indicates to us potential higher credit costs in the coming quarters. We see that HDB is broadly confident in achieving its high growth targets in 2025F and managing asset quality to improve toward the end of the year.

Below are some key highlights from the meeting:   

1. Financials highlights: 

- NIM: Q1 2025 LTM NIM was 5.4% (-20 bps vs Q4 2024 LTM NIM) due to intensified competition in lending rates, supporting customers and a QoQ decline in the CASA ratio (an executive specializing in enhancing CASA mobilization has been appointed to improve performance). Although HDB plans to focus more on resilient, large-scale or anchor clients and public investment projects, which may face higher pricing competition—potentially impacting NIM in 2025, the bank expects that 2025 NIM can still be managed at 5.0%.  

- Credit growth: Aiming for 32% credit growth in 2025F (excluding loans to be transferred to Vikki) supported by agriculture supply chain financing and continuing recovery of the real estate market. Retail credit demand is expected to improve throughout 2025. Q1 2025 credit growth was driven by the corporate segment. Q1 2025 loan balances include 33% household and consumption; 19% real estate business; 15% wholesale & retail business, automobile services; 10% construction; 5% industrial processing; 18% other categories. 

- NOII driver: Investment advisory services, banca later in the year, top 5 FX volume trading (to improve).

- CIR: Low CIR of 27.5% in Q1 2025, seasonal increase toward the end of the year but targeting <35% for the full year.

- Asset quality: The majority of the NPLs are retail loans; additionally, the CIC reclassification impact on the NPL ratio was 40 bps in Q1 2025. Group 2 loans mainly comprise real estate-related loans and wholesales & retail business (expecting to improve in the coming quarters). LLR to improve to 70%-80% by the end of 2025 (vs 53% in Q1 2025). Legalizing Resolution 42 to be approved at this National Assembly should also support debt collection activities of banks. 

- Capital and liquidity: Q1 2025 CAR at 14.3% and LDR at 71.0% indicate headroom for NIM optimization.

2. Subsidiaries:

- HD SAISON: Reported modest 0.8% QoQ loan growth due to seasonal factors. Maintaining a strong market position with a 9% market share and a 22% ROE in Q1 2025. HDS has a strong brand name and first-mover advantage in building its network. 

- Vikki Digital Bank (formerly Dong A Bank): Digital bank targeting retail and SME customers and operates independently from HDB; eligible to raise FOL up to 49% (no immediate plans for adjustment although the bank has received interest from global investors). 

3. Others: 

- HDB to completely adopt a cloud-native core banking in Q2 2025 (Vault Core by Thought Machine), no other banks in Vietnam are currently using this. 

- The bank expects tariff negotiation outcomes, stimulus credit packages by the SBV (HDB registered VND20tn) accompanied with low interest rates, expanding public investment, and private sector support (Decree No.68-NQ/TW) to support economic growth and thus benefit the banking sector.

- Changes in key personnel  

+ The Board of Directors has appointed Mr. Pham Quoc Thanh, a Board member, as Vice Chairman for the 2022–2027 term. Consequently, he is no longer HDB’s Acting CEO to focus on the new position. 

 + Mr. Nguyen Huu Dang will (again) take the role of CEO, effective May 2025. Notably, Mr. Dang resigned from HDB in December 2024 and was appointed Chairman of Vikki Digital Bank (formerly Dong A Bank) in January 2025. He brings nearly 30 years of experience with HDB, including serving as CEO from 2010 to 2020. Following this transition, Mr. Pham Van Dau, HDB’s current CFO (since 2009), will take over as Chairman of Vikki.

 + The bank stated that this personnel change is part of HDB's plan to implement the HD Financial Group model—an integrated, modern, and sustainable financial-banking group—under its 2025–2030 strategy. We think this leadership change may support the optimization of the group’s growth strategy while maintaining focus on Vikki’s restructuring. Both Mr. Dang and Mr. Dau have extensive executive experience at HDB and played key roles in the successful merger with Dai A Bank in 2013.

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