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Company Quarterly Earnings Update – VPB VN – Q1 2025
Summary of Q1 2025 results and outlook of VPBank (VPB VN)
- Net income rose 9.1% y/y, driven by strong credit expansion and sustained improvements in asset quality. Total credit surged by 21.9% y/y, driven by strong corporate lending across diverse sectors, as well as robust mortgages and margin lending. Net interest margin (NIM) contracted slightly by 7bps amid a sustained low-interest rate environment. Net fee income (NFI) declined by 24.8% y/y, primarily due to the regulatory reclassification of Letter of Credit fees as interest income. Conversely, bancassurance fees continued to grow steadily, rising 11.3% y/y, led by growing contributions from OPES, the bank’s digital non-life insurance subsidiary. Cost control remained effective, with the cost-to-income ratio (CIR) improving to 24.9%, compared to 25.8% in Q1/2024. Asset quality improvements also played a key role in supporting profitability, with bad debt recovery income surged and easing credit costs at FE Credit (FEC) helped keep the increase in provisions limited to 15.9% y/y. Notably, the consolidated group 2 loan ratio declined sharply during the quarter, indicating limited new bad debt formation across the portfolios of both the parent bank and FEC.
- FEC achieved positive profitability despite the ongoing aggressive portfolio clean-up strategy. New disbursements increased by 17.0% y/y, effectively offsetting the impact of continued substantial write-offs from the legacy loan book. Additionally, NFI surged by 59.3% y/y from loan-linked insurance products. Enhanced collection efforts contributed to a notable increase in recoveries from written-off loans. Alongside continued operational cost savings, these factors enabled FEC to post a net profit of VND 63bn in Q1/2025, a turnaround from the VND 683bn net loss in Q1/2024.
- Enhanced access to international capital markets reinforcing VPB’s capacity to deliver on its ambitious growth. In addition to strong deposit growth, offshore funding is becoming a key resource supporting the bank’s expansion. Most recently, VPB secured a USD 1.0bn international syndicated loan—the largest ever obtained by a Vietnamese bank, reinforcing its presence in global financial markets and the strategic significance of its partnership with Sumitomo Mitsui Banking Corporation (SMBC).
- For the remaining quarters, we expect continued strong credit growth, while NIM to remain at low level set in Q1. Robust credit expansion is anticipated to be driven by mortgage lending particularly for affordable housing, along with rising demand for consumer finance amid broader economic recovery. Lending to industrial developers and construction firms is also expected to gain further traction. However, the low-interest rate environment is likely to persist, keep NIM under pressure.
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Featured image credit: https://www.vpbank.com.vn/
