{"id":28119,"date":"2019-08-14T08:33:00","date_gmt":"2019-08-14T01:33:00","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&#038;p=28119"},"modified":"2019-08-14T09:25:17","modified_gmt":"2019-08-14T02:25:17","slug":"camel-analysis-2q19-update","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/camel-analysis-2q19-update","title":{"rendered":"CAMEL Analysis \u2013 2Q19 Update"},"content":{"rendered":"<p><strong>We have updated our rankings of the 16 listed Vietnamese banks<\/strong> (those have published 2Q19 financial statements) based on the CAMEL framework, a fundamental approach to bank analysis that focuses on <strong>C<\/strong>apital, <strong>A<\/strong>sset quality, <strong>M<\/strong>anagement, <strong>E<\/strong>arnings, and <strong>L<\/strong>iquidity. For a detailed description of the CAMEL methodology, please see our July 5 report titled \u201c<a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/07\/Banks-CAMEL_05.07.pdf\">Vietnam Banks CAMEL Analysis \u2013 The good, the bad, and the chronically mispriced<\/a>.\u201d The updated rankings in this report are based on the banks\u2019 2Q19 unaudited financial statements, whereas our initial report was based on 2018 audited results. Table 3 inside presents detailed scores on 63 fundamental metrics for each listed bank. Clients who wish to see the underlying data are encouraged to request it from us.<\/p>\n<p><strong>Themes and catalysts<\/strong><\/p>\n<ul>\n<li><strong>Increased focus on f<\/strong><strong>ee income. <\/strong>Fees reached 12.1% of total sector revenue in 2Q19, +1.2ppt QoQ and +1.8ppt YoY.<\/li>\n<li><strong>Earnings <\/strong>increased 18.4% YoY in 1H19 for the listed banks universe.<\/li>\n<li><strong>Stronger solvency capital <\/strong>on capital calls (increased PAT helped).<\/li>\n<\/ul>\n<p><strong>Risks<\/strong><\/p>\n<ul>\n<li><strong>Slight deterioration in asset quality.<\/strong> The sector\u2019s NPL ratio climbed to 1.70% in 2Q19, +1bp YoY and +7bps YTD.<\/li>\n<li><strong>NIM pressure possible in 2H19 <\/strong>as yields fall on policy lending in support of priority industries.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>VCB supplants TCB as the No. 1 CAMEL-ranked bank <\/strong>on our CAMEL framework. VCB\u2019s strong CASA deposit franchise is a core competitive advantage, demonstrated by its sector-low funding cost. The No.1 ranking is no surprise to us, as it is among our top picks in the banking sector. For more details on our view on VCB, please see our initiation note titled \u201c<a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/06\/VCB_Initiation_Jun-2019.pdf\">VCB: Leading funding franchise justifies the premium valuation<\/a>\u201d.<\/p>\n<p><strong>TCB (Not Rated) and ACB (Not rated) round out the top three<\/strong>. TCB lost its 4Q18 crown largely on asset quality (i.e. rising NPL ratio) and earnings power (i.e. declining trend). MBB (BUY) fell from 2<sup>nd<\/sup> place previously to 4<sup>th<\/sup>, largely because of lower scores for capital adequacy (i.e. higher leverage) and liquidity (i.e., increased LDR to &gt;90%).<\/p>\n<p><strong>STB\u2019s CAMEL score improved slightly from 3.0 in 2018A to 2.9 in 2Q19<\/strong>. STB\u2019s 1H19 PBT increased 51% YoY. More critically, its total net NPA ratio shrank from 22% in 4Q18 to 20% in 1Q19 and 19% in 2Q19, and its NPL ratio declined to 1.96% (-15 bps HoH). Although the balance sheet cleanup has a long way to go, we believe that STB\u2019s <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/01\/STB_Initiation_January-2019-Final-1.pdf\">turnaround story remains intact<\/a> and that substantial upside awaits long-term investors.<\/p>\n<p><strong>Banks with stronger CAMEL rankings deserve a premium valuation <\/strong>relative to weaker banks, in our view. VCB ranks highly and trades at a current sector-high 3.8x P\/BV (source: Bloomberg). Banks with low CAMEL rankings such as SHB or LPB trade at low P\/BVs of around 0.5x (See Figure 1 in the note). By contrast, ACB and MBB trade at just 1.5x and 1.4x P\/BV, despite posting similar CAMEL scores as VCB. We attribute this to the latter stocks\u2019 full-FOL status, which confirms our <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/04\/Vietnam-Strategy-Of-FOLs-and-Money-5.pdf\">cautious tactical view<\/a> on full-FOL stocks.<\/p>\n<p>For the complete report, please access here: <a href=\"http:\/\/yuanta-uat.ysvn.com.vn\/wp-content\/uploads\/2019\/08\/Banks_CAMEL_14.08-2Q19_Updated_Final.pdf\">Banks_CAMEL_14.08 &#8211; 2Q19_Updated_Final<\/a><\/p>\n<p><strong>Analyst:<\/strong><\/p>\n<p><strong>Matthew Smith<\/strong>, CFA, Head of Research: <em>matthew.smith@yuanta.com.vn<\/em><\/p>\n<p><strong>Tanh Tran<\/strong>, <em>tanh.tran@yuanta.com.vn<\/em><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We have updated our rankings of the 16 listed Vietnamese banks (those have published 2Q19 financial statements) based on the CAMEL framework, a fundamental approach to bank analysis that focuses on Capital, Asset quality, Management, Earnings, and Liquidity. For a detailed description of the CAMEL methodology, please see our July 5 report titled \u201cVietnam Banks&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-28119","phan-tich","type-phan-tich","status-publish","hentry","analysis-category-financials"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.3 (Yoast SEO v23.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CAMEL Analysis \u2013 2Q19 Update | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"We have updated our rankings of the 16 listed Vietnamese banks (those have published 2Q19 financial statements) based on the CAMEL framework, a\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CAMEL Analysis 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