{"id":56274,"date":"2020-04-21T14:07:49","date_gmt":"2020-04-21T07:07:49","guid":{"rendered":"https:\/\/yuanta.com.vn\/?post_type=phan-tich&p=56274"},"modified":"2020-04-21T14:07:49","modified_gmt":"2020-04-21T07:07:49","slug":"vcb_1q20-earnings-down-11-2-yoy","status":"publish","type":"phan-tich","link":"https:\/\/yuanta-uat.ysvn.com.vn\/en\/analysis\/vcb_1q20-earnings-down-11-2-yoy","title":{"rendered":"VCB_1Q20 earnings down -11.2% YoY"},"content":{"rendered":"

BUY<\/strong><\/span><\/p>\n

TP upside (downside) +13%
\nClose 21 Apr 2019
\nPrice \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 68,500
\n<\/strong>12M Target \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong>VND 77,600<\/strong><\/p>\n

 <\/p>\n

Event<\/strong><\/span><\/p>\n

VCB reported 1Q20 PATMI of VND4.2 tn<\/strong> (-5.2% QoQ\/-11.2% YoY), largely due to the +9.2% QoQ\/+42.9% YoY rise in credit costs. VCB has achieved 20% of Bloomberg consensus for 2020E.<\/p>\n

Details<\/strong><\/span><\/p>\n

Credit growth increased by only 2.7% YTD<\/strong>. The bank targets 14% credit growth for 2020E, while we estimate 13% YoY growth.<\/p>\n

1Q20 Net interest income<\/strong> was VND9.0 tn (+4.6% QoQ\/+6.3% YoY).<\/p>\n

Falling CASA deposits is a concern. <\/strong>CASA deposits fell by 7% QoQ. As at 1Q20, VCB\u2019s CASA ratio was 29.4%, down 1.4ppt vs. 2019A.<\/p>\n

1Q20 net fee income <\/strong>was VND1.1 tn (+27.2% QoQ\/5.4% YoY). Net gain from FX and gold dealing was also VND1.1 tn (+31% QoQ\/+19%YoY). By contrast, net income from trading securities declined by -284% QoQ and -183% YoY.<\/p>\n

Provisioning <\/strong>increased by +9.2% QoQ and +42.9% YoY to reach VND2.2 tn in 1Q20. NPLs (0.82%) were flat QoQ but SMLs jumped by 110% QoQ. The bank\u2019s loan loss ratio increased by 53ppt QoQ\/+66ppt YoY to reach 235%.<\/p>\n

Our view<\/strong><\/span><\/p>\n

Earnings forecasts for 2020E appear stretched<\/strong> (both ours and the consensus, which has already fallen since our March report<\/a>). Credit growth, NIM, fee income, and provision costs will all be under pressure. 2Q20 is very likely to be worse than 1Q20, which puts the full year target at downside risk. Thus, negative earnings revisions for 2020 are likely to be forthcoming relatively soon.<\/p>\n

Credit costs & LLR are key to monitoring asset quality in 2020. <\/strong>Reported NPLs (which are basically flat) will understate the degree of asset quality deterioration due to the SBV\u2019s forbearance policies. We think the bank\u2019s increased provisions and LLR reflect a prudent approach to preparing for the future, as not all borrowers will be able to repay. However, we think that VCB is taking the right approach by building up a strong buffer to weather the probable asset quality deterioration in upcoming quarters.<\/p>\n

We reiterate our BUY recommendation<\/strong>. VCB trades at 2.5x 2020E P\/B, which we consider to be attractive. Despite the current operational headwinds, VCB remains the highest-quality bank and is well positioned as a proxy on Vietnam\u2019s positive multiyear macro story.<\/p>\n

 <\/p>\n

For the complete report, please access here: VCB_1Q20_Express note<\/a><\/p>\n

Analyst: Tanh Tran<\/strong>,\u00a0tanh.tran@yuanta.com.vn<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

BUY TP upside (downside) +13% Close 21 Apr 2019 Price \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 68,500 12M Target \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 77,600   Event VCB reported 1Q20 PATMI of VND4.2 tn (-5.2% QoQ\/-11.2% YoY), largely due to the +9.2% QoQ\/+42.9% YoY rise in credit costs. VCB has achieved 20% of Bloomberg consensus for 2020E. Details Credit growth increased by…<\/p>\n","protected":false},"author":10,"featured_media":0,"template":"","class_list":["post-56274","phan-tich","type-phan-tich","status-publish","hentry","analysis-category-company-update","analysis-category-financials"],"acf":[],"yoast_head":"\nVCB_1Q20 earnings down -11.2% YoY | Yuanta Vietnam<\/title>\n<meta name=\"description\" content=\"BUY TP upside (downside) +13% Close 21 Apr 2019 Price \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 68,500 12M Target \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 VND 77,600   Event VCB reported 1Q20 PATMI of\" \/>\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=\"VCB_1Q20 earnings down -11.2% YoY\" \/>\n<meta property=\"og:description\" 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