- 2024-04-22T00:00:00
- Company Research
LPB released its Q1 2024 results with TOI of VND4.5tn (USD260mn; +42.9% YoY) and bottom-line net profit of VND2.3tn (USD92mn; +84.9% YoY), fulfilling 26% and 35% of our respective FY2024 forecasts. The bank’s results beat our expectations, which we attribute partly to (1) higher-than-expected net other fees income that increased 2.6x YoY in Q1 2024, (2) lower-than-expected operating expenses, and (3) better-than-expected asset quality. We see a slight upside to our earnings forecasts for LPB, pending a more extensive review of LPB’s credit growth.
- Q1 2024 loan growth was 11.7% QoQ – beating our expectation and far higher than the system-wide credit growth of around 1%. We note that in Q1 2024, LPB mainly distributed its credit to corporate sectors while loans to the retail segment decreased 4% QoQ. Sectors that LPB focused on were wholesale, construction, accommodation, and recreation in Q1 2024. This movement is different from LPB’s vision that it continues to target rural areas and the retail segment.
- Q1 2024 deposit growth was 10.4% QoQ, closely in line with loan growth. LPB’s CASA ratio improved to 10.7% (+1.0 ppts QoQ and +5.4 ppts YoY).
- Q1 2024 NIM was 3.57% (+14 bps YoY), which was slightly ahead of our full-year expectation of 3.43%. This is due to (1) LPB’s funding was adjusted to lower costs under lower deposit rates and (2) a higher CASA ratio that outweighs (3) the lower asset yields due to a higher proportion of corporates and short-term loans.
- Q1 2024 NOII was VND1.0tn (+181.6% YoY), completing 30.8% of our full-year forecast. The strong NOII growth was mainly driven by a 262% YoY increase in pure NFI, in which, LPB recorded an abnormal other fees income of VND750bn in Q1 2024 vs only VND57bn in Q1 2023 that outweigh a 58% YoY decrease in bancassurance sales.
- Q1 2024 CIR decreased 12.2 ppts YoY to 30.7% due to a 42.9% YoY increase in TOI that outweighed a 2.4% YoY increase in OPEX. According to the bank’s data, the total number of LPB’s employees decreased 12.4% YoY.
- LPB reported an improvement in asset quality on both a QoQ and YoY basis with the NPL ratio grossed up write-off rate decreasing by 149 bps QoQ and 56 bps YoY to 1.39% in Q1 2024 vs our forecast of 2.00%. We note that the balance of NPLs to grossed up write-offs decreased 7.3% QoQ in Q1 2024.
- Q1 2024 annualized credit cost was 0.28% (vs 0.37% in Q1 2023 and 2.24% in Q4 2023). In addition, LPB’s LLR in Q1 2024 was 88.9% (-4.8 ppts QoQ; -22 ppts YoY).
LPB’s consolidated Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY |
NII | 2,774 | 3,464 | 24.9% |
Non-interest income | 360 | 1,013 | 181.6% |
OPEX | (1,344) | (1,376) | 2.4% |
PPOP | 1,790 | 3,101 | 73.3% |
Provision expenses | (224) | (215) | -4.1% |
NPAT-MI | 1,243 | 2,299 | 84.9% |
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Loan growth** | 2.8% | 11.7% | 8.9 ppts |
Deposit growth** | 5.3% | 10.4% | 5.1 ppts |
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NIM | 3.43% | 3.57% | 14 bps |
Interest-earning asset yield | 9.39% | 8.35% | -104 bps |
Cost of funds | 6.55% | 5.33% | -122 bps |
CASA ratio* | 5.3% | 10.7% | 5.4 ppts |
CASA ratio plus term deposits in FX | 6.5% | 10.8% | 4.3 ppts |
CIR | 42.9% | 30.7% | -12.2 ppts |
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NPLs / Gross loans | 1.45% | 1.39% | -6 bps |
Group 2 loans / Gross loans | 1.99% | 0.80% | -119 bps |
Accrued interest / IEAs | 1.19% | 1.00% | -19 bps |
Source: LPB, Vietcap — *CASA volume included demand deposits and margin deposits; ** Q1 2023 and Q1 2024 loan and deposit growth is QoQ growth.
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