Company Quarterly Earnings Update – HDB VN – Q1 2022

Summary of the Q1/2022 results of HDBank  (HDB VN)

Q1/2022 results: Highlights

  • HDB’s consolidated credit and deposits grew by 18.4% y/y and 8.9% y/y respectively. Asset quality remains solid with the non-performing loan (NPL) ratio stable at 1.6%. The amount of COVID-19 restructured loans reduced by 57.8% y/y to VND 1,900bn (0.8% loan book), as clients resumed repaying their loans as the economy reopened. Capital Adequacy Ratio (CAR) was 14.2%, far above the required ratio of 8.0%.
  • Consolidated net profit increased by 22.6% y/y, driven by the parent bank’s solid results, while HD Saison (HDS) have also shown strong recovery. Pre-provisioning profit rose by 25.9% y/y due to: (1) positive results from net interest income and net fee income (+20.2% y/y and +94.1% y/y respectively) and (2) improved operational efficiency with a lower cost-to-income ratio. Net Interest Margin (NIM) rose by 20bps y/y thanks to the cheaper funding costs from the international convertible bond issued in Q1/2022, and the rebound in HDS’s lending rate. Although provision cost rose by 53.3% y/y as higher NPL at HDS, Q1/2022 profit fulfilled nearly 25% of our projection.
  • At the AGM, HDB set a target for net profit to go up by 21% y/y. The AGM also elected 2 Independent Directors to the Board from IFC and German Investment Corporation (DEG). Mr. Kim Byoungho from IFC was elected to be the Chairman.

2022 & 2023 Outlook

  • We think the earnings outlook for HDB is solid because: (1) credit demand from consumers and SME’s are strong, while HDB can access HDS’s large customer base (9.7mn) and of Vietjet Air (VJC) (25.0mn); (2) new contribution from bancassurance with Dai-chi and FWD. Also, the participation of international organizations into the BoD may help the bank has more access to favorable funding sources from the international market.
  • For 2022, there is no major change to our forecast. Though provision expenses were revised up as HDS may make provisions more aggressively, higher credit demand and NIM offset the impact. Overall, we project 2022F net profit to rise by 23.5% y/y.
  • For 2023, we project net profit to rise by 15.7% y/y due to stable asset quality and resilient growth of the total operating income.


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