According to VDSC, the ability to increase capital of this bank in 2022 is uncertain, while the receipt of bank transfer is also unpredictable in terms of benefits and time falling points. Vietcombank has been relatively stable in the face of difficulties in the corporate bond and real estate markets thanks to its appropriate exposure. Besides, the bank does not allocate much credit to real estate developers and corporate bonds.
With a cautious provision in the first half of the year, VDSC believes that the bank will easily overcome the fluctuations from restructuring debt in the second half of the year. Balance sheet growth will remain positive despite credit growth uncertainty. NIM is expected to be flat compared to the first half of the year, at 3.3%, despite the increase in deposit rates.
Pre-tax profit from 2022-2023 is predicted to be not much affected by the forecast adjustment, remaining at VND 36,900 billion (up 35%) and VND 41,400 billion (up 12%). This equals to a profit growth of 41% over the same period. Credit cost will be the key growth factor while NIM will make a positive contribution.
The ratio of NPLs decreased steadily to an insignificant level (0.2%) in the first 6 months, reducing the pressure of provisioning and creating room for reversal at the end of the year. Structural debt balance has decreased significantly from VND 10,500 billion in 2021 to VND 8,000 billion in Q1/22 and VND 6,500 billion in April and VND 5,000 billion in May respectively before reaching VND 4,000 billion in the second quarter of 2022.
As the main growth driver is improving risk cost, VietinBank is less affected by uncertainty in credit growth limit. Disbursement of public investment will be the supporting factor for the recovery. Therefore, VDSC believes that the bank's high profit growth in the second half of the year is relatively certain.
According to experts, growth is expected to reach 54% in the second half of the year, with pre-arrival growth of 20%. Expanding NIM will be supportive, while fee income growth will continue to improve thanks to bancassurance sales. Credit growth is forecast at 12%. Actual developments may be unexpected when the bank is asking for a growth rate of 14-15%.
In addition, by investing in technology, combined with increased risk-adjusted NIM thanks to sharply reduced funding costs and controlled credit costs, VietinBank is able to effectively grow its balance sheet despite pressure from capital sources. The upcoming growth in payments and collection will contribute to better profitability through growth in non-interest income.
However, VDSC believes that downside risks include uncertain economic recovery and preferential lending packages. Bullish risks include higher-than-expected credit growth.
Credit costs were the main driver, especially in the second quarter of 2022. Experts expect BIDV to accelerate profit growth to 79% year-on-year in the second half of 2022, before normalizing to 14% in 2023 with the bottom line still being on credit costs.
However, with large unrecovered provisions for structural debt, BIDV will have a solid growth foundation that can be surprising when customers recover well (especially large enterprises). In the short term, BIDV has no intention of reversing the provision.
Gross income growth is forecast at 18% in H2H and 9% in 2023, driven mainly by stable credit growth and NIM while fee income remains negative in the same period.
According to VDSC, the capital increase plan may face difficulties from the adjustment momentum and regulations of the stock market. Despite many uncertainties, the capital increase will help the bank drive revenue growth through the ability to expand its balance sheet more sustainably. It should act as a powerful catalyst supporting stock prices as growth normalizes in 2023.
Asset quality gradually improved after handling VAMC bonds. The rate of bad debt formation decreased from a high base to a more efficient level, supporting NIM after risk adjustment. Profitability and overall efficiency will be strengthened thanks to the potential to raise capital, thereby providing good scalability.
Techcombank expects a good recovery in corporate bond market performance to support fee income and offset the decline in the debt collection segment. Fee income is forecast to grow by 45% in the second half and 23% in 2023, leading to 24% and 19% growth in total income, respectively.
Credit growth forecast and NIM in 2022 are revised down. NIM will fluctuate at around 5.4-5.6% in 2022-2023. The CASA ratio will increase again, mainly thanks to a more abundant capital supply. Credit costs will remain below 0.5% thanks to a good portfolio. Experts forecast 2022 pre-tax profit of the bank at VND 29.0 trillion (up 25% year-on-year) but down 5% compared to 2023 to reflect slower asset growth.
In terms of fee income, the bancassurance segment faced stiff competition but still grew by 33% in terms of annual premium equivalent (APE) in the first 6 months of the year. The bank will reverse the provision for bonds in the second half of the year, estimated at more than VND 500 billion.
Although growth slows in 2022 due to tightening conditions, experts believe in the long-term capacity for balance sheet growth and ROE improvement of the bank.
According to experts, the bank is able to maintain profitability and operational efficiency in a variety of environments thanks to its capital mobilization costs and competitive credit facility prices as well as its high customer financing capacity. In the second half of the year, Techcombank will balance overall NIM, risk cost and capital allocation to accommodate uncertainties such as credit growth limit not as expected.
In addition, thanks to its extensive asset management ecosystem that helps retain cash flow, the bank is able to grow its deposit base with a stable CASA while also mobilizing internationally for long-term capital and good interest rates. Experts expect Techcombank to maintain momentum and performance in the second half of the year as credit risk costs and customer risk profiles continue to improve.
Compiled by VietnamCredit