Business results Q1/2021

– In Q1/2021, VPB continued to maintain earnings growth compared to Q12020 with PBT+37.6% mainly due to op-erating costs reduction. This is also a relatively low growth rate compared to the overall sector in the first quarter.

– On the earnings side, FE Credit has not recovered (ENR), causing bank’s total credit to grow just over 2%ytd while earnings from interest rates slightly increased by only 0.68% yoy. A sharp drop in COF is the main motivation for improving net interest income. Meanwhile, increasing service income (+42%) and revenues from bad debt han-dling (+75%) are key growing drivers for non-interest in-come (+2.5%yoy).

– The handling of bad debts and restructured debts under Cir.01 is positive as restructured loans declined to VND 7.5 trillion (2.2% of total outstanding debt) at the end of Q12021.

Recommendation:

VPB shares are trading around 58,000VND/share, correspond-ing to P/B 2.41, higher than most banks in the sector (only below VCB) and 10%-20% higher than the same-size com-mercial banks.
Therefore, IVS rated “NEUTRAL” for VPB shares when the current price has reflected expectations of FE Credit divest-ment as well as the bank’s business prospects.