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Company Quarterly Earnings Update – VPB VN – Q4 2024
Summary of Q4/2024 results and outlook of VPBank (VPB VN)
- VPBank marked a transformational year, underpinned by rigorous restructuring efforts following SMBC’s entry as a strategic investor. The parent bank maintained robust credit growth, while a sharp rise in provisions suggests a proactive approach to portfolio management, leading to a notable improvement in asset quality. At the same time, the consumer finance arm FE Credit (FEC) delivered a remarkable turnaround after three years of restructuring. Supported by enhanced risk management and a data-driven underwriting approach, it saw a sharp decline in non-performing loans (NPLs), robust net interest margin (NIM) recovery, resumed portfolio growth, and a return to profitability. The bank also benefited from a favorable economic environment, coupled with past aggressive provisioning efforts, which enabled substantial bad debt recovery income. Beyond banking, OPES, VPB’s non-life insurance arm, has capitalized on the growing demand for digital insurance, solidifying its position as a pioneer with leading data and technology capabilities.
- Net income surged 58.2% y/y, driven by broad-based improvements across core metrics. Credit growth remained solid, with total credit expanded by 17.8% y/y, together with a 23bps improvement in NIM, contributing to a 28.6% y/y increase in net interest income (NII). Net fee income (NFI) declined by 15.1% y/y, largely due to the regulatory reclassification of Letter of Credit fees as interest income; nevertheless, the bank saw a promising emergence of new fee income streams from the non-life insurance segment, advancing 43.6% y/y. Asset quality improvements also played a key role in profitability, driving substantial bad debt recovery income, which surged 43.6% y/y, while easing credit costs at FEC helped keep provisions at a controlled 11.6% y/y increase. Effective cost control kept operating expenses rising by just 2.9% y/y, improving the cost-to-income ratio (CIR) to 23.0%, while diligent portfolio cleanup led to notable reductions in NPLs and loan group 2 ratios.
- 2025F net profit is expected to be supported by an acceleration of credit growth, driven by mortgage lending as the southern real estate market recovers and rising demand for consumer finance amid broader economic expansion. Lending to developers and construction firms is also set to gain significant traction. NFI will be bolstered by bancassurance as VPB captures non-life insurance market through extensive distribution channels, while favorable economic conditions are expected to boost income from bad debt recovery. Additionally, improved asset quality is likely to lower provisioning costs, enhancing bottom-line growth.
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