VCB released its Q1 2025 results with TOI of VND17.3tn (US664mn; -0.1% YoY) and PBT of VND10.9tn (USD418mn; +1.3% YoY), fulfilling 22% and 22% of our respective FY2025 forecasts. Overall, VCB’s results tracked behind our expectations primarily due to weaker-than-expected NIM, consistent with the results we saw at most banks under our coverage that have reported their results. We see slight downside risk to our current earnings forecasts, pending a more extensive review. Despite somewhat of a slow start to the year, we remain convinced VCB's unparalleled competitive advantages in terms of high CASA/low funding costs, premium customer base, and strong capital buffer will allow it to navigate through tariff uncertainties to deliver strong business growth this year and maintain its market-leading position.

• Q1 2025 credit growth reached 1.2%, which trailed system-wide credit growth of 3.9%. VCB likely sold loans to VCB Neo in the quarter to support the recovery of this zero-dong bank under the mandatory transfer plan. According to local press, VCB has sold VND51tn of loans to VCB Neo, which is equivalent to 3.5% of the bank’s year-end 2024 credit balance. In our view, VCB's credit growth in Q1 2025 would have looked stronger than the industry when adding back the amount sold to VCB Neo, indicating robust business momentum.
• Q1 2025 customer deposits growth was (0.4%). The Q1 2025 CASA ratio was 35.4% (+0.7 ppts YoY, -1.3 ppts QoQ), remaining among the highest in the sector.  
• Q1 2025 NII of VCB declined 2.8% YoY as a large decline in NIM outweighed solid credit growth. Q1 2025 NIM compressed on a YoY basis to 2.63% (-51 bps YoY, -15 bps QoQ), driven primarily by a sizeable decline in interest-earning asset yield (-63 bps YoY, -2 bps QoQ) partially offset by an improvement in cost of funds (-16 bps YoY, +15 bps 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) a higher weight of short-term loans in the bank’s credit mix.  
• Asset quality remained strong with an NPL ratio of 1.03% (-17 bps YoY, +6 bps QoQ) in Q1 2025 vs our year-end 2025 forecast of 0.92%. The group 2 loan ratio was 0.29% (-26 bps YoY, +2 bps QoQ) in Q1 2025. VCB wrote off VND443bn in Q1 2025 - equivalent to a write-off rate over gross loans of 0.03%. 
• Q1 2025 annualized credit cost was 0.21% vs 0.48% in Q1 2024. We estimate VCB reversed VND1.0tn of provision expenses on interbank loans in Q1 2025 (Q1 2024 included a similar reversal of VND728bn). In addition, VCB’s Q1 2025 LLR edged down slightly QoQ to 216% vs 223% in the previous quarter but remained the strongest in the sector.
• Q1 2025 NOII was VND3.6tn (+11.7% YoY), completing 25% of our full-year forecast. FX trading gains saw strong growth of 69.0% YoY. However, net fee income was weak with a 44.1% YoY decline.
• Q1 2025 CIR increased 3.5 ppts YoY to 32.7% vs our full-year forecast of 31.9% due to a 11.8% YoY increase in OPEX against flat TOI.

VCB’s consolidated Q1 2025 results 

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

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