STB - Earnings beat forecast on reversal of bad debt provisions - Earnings Flash
  • 2025-01-24T00:00:00
  • Company Research

STB released its 2024 results with TOI of VND28.7tn (USD1.1tn; +9.6% YoY) and PBT of VND12.7tn (USD509mn; +32.6% YoY), fulfilling 96% and 124% of our respective FY2024 forecasts. While the bank's top-line performance aligned with our forecast, lower-than-expected provision expenses resulted in bottom-line growth exceeding our projections. On a QoQ basis, Q4 2024 PBT increased 64% due to the reversal of provision expenses in Q4 2024. We see upside potential to our earnings forecasts for STB, pending a more extensive review.

  • 2024 credit growth was 11.7% vs system-wide credit growth of 15% and STB’s 2024 credit quota at around 13%. This was due to weak credit demand of retail clients and intense lending competition among banks.  
  • Customer deposit growth in 2024 reached 11%, closely matching the credit growth rate, with Q4 deposits remaining flat QoQ. In Q4 2024, STB’s CASA ratio slightly increased to 18.3% (+64 bps QoQ). 
  • 2024 NIM decreased 20 bps YoY to 3.72%, slightly below our full-year forecast of 3.82%. On a QoQ basis, STB’s Q4 2024 NIM decreased by 27 bps to 3.52%, aligning with trends observed across retail banks in our coverage. This decline was primarily driven by rising funding costs as banks increased deposit rates over the past six months, coupled with pressure on asset yields due to heightened competition among banks. 
  • In 2024, NOII reached VND 4.1 trillion (+1.1% YoY), achieving 96% of our full-year forecast. We attribute the flat YoY growth in NOII to (1) persistently weak bancassurance sales and (2) lower recovery income from written-off bad debts. On a positive note, STB's pure NFI demonstrated steady growth throughout the year. 
  • 2024 CIR surged to 48.8% (-50 bps YoY) and was better than our full-year forecast of 50.9%.  
  • STB’s Q4 2024 asset quality was maintained QoQ with an NPL ratio of 2.40% (-7 bps QoQ and +13 bps YoY). In contrast, STB’s NPL formation in Q4 2024 ticked up compared to Q3, with Group 2/gross loans increasing 5 bps QoQ to 0.77%. 
  • Provision expenses in 2024 declined by 46.5% YoY, with the annualized credit cost reduced to just 0.37% (compared to 0.76% in 2023). We attribute this improvement partly to (1) reduced pressure from VAMC provisioning and (2) STB’s successful recovery of NPLs, resulting in a significant reversal of provisions in Q4 2024. STB reported a net reversal of provision expenses of VND367bn in Q4 2024. Additionally, STB’s LLR remained stable YoY at 68.5% in Q4 2024, though it decreased by 6.6 ppts QoQ.

STB’s consolidated 2024 results

VND bn 

  2023 

 2024 

 YoY 

 Q4 2023 

 Q4 2024 

 YoY 

 NII 

22,072

24,532

11.1%

5,633

6,099

8.3%

 Non-interest income 

4,101

4,145

1.1%

1,075

1,315

22.3%

 OPEX 

(12,890)

(13,982)

8.5%

(3,410)

(3,151)

-7.6%

 PPOP  

13,283

14,695

10.6%

3,299

4,263

29.2%

 Provision expenses 

(3,688)

(1,974)

-46.5%

(544)

367

N.A

 NPAT-MI     

7,719

10,088

30.7%

2,259

3,602

59.4%

 

 

 

 

 

 

 

 Loan growth** 

10.1%

11.7%

1.6 ppts

2.3%

2.6%

0.3 ppts

 Deposit growth**  

12.3%

11.0%

-1.3 ppts

0.6%

0.0%

-0.6 ppts

 

 

 

 

 

 

 

 NIM 

3.91%

3.72%

-19 bps

3.79%

3.52%

-27 bps

 Interest-earning asset yield 

9.92%

7.57%

-235 bps

9.22%

7.28%

-194 bps

 Cost of funds 

6.23%

4.30%

-193 bps

5.64%

3.97%

-167 bps

 CASA ratio* 

18.6%

18.3%

-29 bps

18.6%

18.3%

-29 bps

 CASA ratio plus term deposits in FX    

20.2%

19.9%

-34 bps

20.2%

19.9%

-34 bps

 CIR 

49.2%

48.8%

-49 bps

50.8%

42.5%

-8.3 ppts

 

 

 

 

 

 

 

 NPLs / Gross loans   

2.28%

2.40%

12.0 bps

2.28%

2.40%

12.0 bps

Group 2 loans / Gross loans  

0.73%

0.77%

4.0 bps

0.73%

0.77%

4.0 bps

 Accrued interest / IEAs  

0.94%

0.73%

-21.0 bps

0.94%

0.73%

-21.0 bps

Source: STB, Vietcap — *CASA volume includes demand deposits and margin deposits; ** Q4 2023 and Q4 2024 loan and deposit growth is QoQ growth; 2023 and 2024 loan and deposit growth is 12M growth.

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