BANKING SECTOR OUTLOOK 2022
© RESEARCH DEPARTMENT ǀ 10.12.2021
SECTOR UPDATE 2021
NEW PHASE AND 2022 OUTLOOK
STOCK RECOMMENDATION
© RESEARCH DEPARTMENT
2
CREDIT:
REMAIN POSITIVE GROWTH RATE
Credit for the whole system recorded a growth rate of 8.7% by the end of October, 2021, higher than the
9M.2021 Credit growth
growth rate of 7.6% in the same period of 2020. Current credit demand is at a positive level and expected to
reach 13% at year end.
MSB
17.0%
TCB
17.0%
The credit growth rate of the whole industry is forecasted to remain high in the long term: Vietnam is
MBB
15.2%
among the countries with the highest GDP growth rates in the world. Economic growth in general and an
TPB
11.6%
VCB
11.6%
upward trend in retail credit will continue to drive credit growth across the industry in the long term.
16.0%
Private sector credit growth 2016 - 2020
CAGR
14%
14.0%
12.0%
10.0%
10%
9%
8.0%
6%
6%
6.0%
4%
4.0%
2.0%
0.0%
5%
4%
7%
VIB
10.9%
LPB
10.7%
Ytd credit growth
20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
OCB
10.2%
SHB
9.8%
BID
8.70%
T1 T2 T3 T4 T5 T6 T7 T8 T9 T10 T11 T12
2016
2017
2018
2019
2020
2021
9.1%
ACB
8.0%
VPB
7.9%
HDB
7.6%
CTG
-5.0%
6.4%
0.0%
5.0%
10.0%
Loan to customers
© VCBS Research Department
15.0%
20.0%
25.0%
Corp bond
Source: WB, SBV, Banks, VCBS summary
3
CREDIT:
CREDIT GROWTH LIMIT (ROOM)
SBV has raised the credit growth limit twice in Q3 and Q4. Due to the relatively low level of credit room at the beginning of the year, many banks have applied for an
additional grant and have been allowed to expand the room twice by SBV in 2021. Since SBV is continue reviewing credit growth limit request from banks, we expect these
banks to be granted additional credit growth room by the end of 2021.
The credit growth limit approval criteria of SBV can be mentioned includiing the abundance of equity (CAR), risk management capacity (shown by compliance with Basel
II, Basel III, IFRS 9 standards, etc.) ...), the level of social support in the period of economic difficulties (through exemption and reduction of interest rates and fees). We
believe that banks with high CAR and good risk management models such as TCB, TPB, VPB, MBB, ACB, HDB, VIB, MSB, etc. will be granted a higher-than-average credit
growth limit in the long run.
Credit growth limit 2021
25.0%
21.0%
19.3%
20.0%
17.1%
15.0%
15.0%
23.4%
22.1%
12.0%
22.0%
18.1%
15.0%
14.3%
17.0%
15.0%
12.5%
15.0%
13.0%
10.0%
11.0%
5.0%
9.0%
0.0%
7.0%
BID
CTG
VCB
STB
MBB
Room granted at beginning
© VCBS Research Department
ACB
VPB
SHB
Room raised in Q3
TCB
HDB
Room raised in Q4
VIB
LPB
TPB
MSB
OCB
CAR 2020 (RHS)
Source: SBV, Banks, VCBS summary
4
CREDIT:
RETAIL CREDIT
Propotion of Retail credit
Retail credit has been the main growth driver over the past five years. The proportion of
retail credit increased from 31% in 2015 to 42% of total outstanding loans at the end of
45%
Q3.2021.
40%
Since FDI enterprises contributing a large part in VN’s GDP, the increase in the proportion of
35%
workers with high-income jobs helps to increase assets and promote the demand for consumer
30%
39.8%
40.7%
2019
2020
41.9%
37.5%
34.7%
-
loans.
-
Retail and SME credits are also preferred by banks when the risk weighted ratio (when
32.6%
30.6%
25%
20%
2015
calculating CAR) is lower than that of large corporate loans under Circular 41. Specifically,
2016
2017
2018
Q3.2021
retail credit secured by real estate has the risk weighted ratio determined by LTV and is usually
2020 Propotion of Retail credit
less than 80%, retail credit with collateral that is not real estate has a risk coefficient of 0.75
-
and SME credit has a risk coefficient of 0.9. Large enterprises in industries with high risk
60%
weight such as real estate are not favored and have partly shifted their capital needs to
50%
corporate bonds market.
40%
The current 2 retail products with large balances are Home Loans and Car Loans and the scale
of these 2 products is still increasing rapidly every year.
40%
40%
Việt Nam
ASEAN-3
44%
48%
30%
20%
10%
In 2020 and 2021, we witness the boom of real estate and securities markets, which is part
of the reason for the increase in retail credit.
© VCBS Research Department
0%
TQ
Mỹ
Source: Bloomberg, Banks, VCBS summary
5
CREDIT:
CORPORATE BOND MARKET
Corporate bond market grew rapidly and reach VND 1,200 trillion outstanding amount in Q3.2021. The development of the corporate bond market is largely due to the
promotion of Circular 41 (Basel 2). Accordingly, real estate companies are imposed a risk weight of 200%, while banks in Vietnam mostly have limited CAR and limited credit
room so they do not give priority to real estate companies lending. Bond issuance is therefore a solution used to raise capital for businesses that have difficulty accessing bank
credit in the new context. Banks acting as investment banks distribute these bonds to individual customers. On the retail buyers side, corporate bond have more attractive interest
rates than bank deposits and are well received.
TCB is currently the leading in investment banking activities, the advantage of high CAR ratio and high credit room also helps TCB have better access to high-risk customers
than other banks. This efficient operating model is being developed by many other banks.
Regulations related to the issuance of corporate bonds regularly change. Most recently, SBV announced Circular 16/2021 more closely stipulating the conditions for buying
corporate bonds of commercial banks and supplementing the regulation that commercial banks are not allowed to sell corporate bonds (exc FI bonds) to subsidiaries. This
regulation will cause the operation method at some banks to change, but the expectation that the corporate bond market will continue to develop will not change.
Fast growing Corp bond market
180%
19%
Corp bond underwriting market share
H1.2021 (Exc FI Bond)
HOSE Corp bond brokerage market share
H1.2021
17%
TCBS
17%
160%
11%
140%
120%
6%
9%
130%
130%
136%
2017
2018
2019
149%
Others
50%
Bank credit as % of GDP
© VCBS Research Department
2020
T9.2021
TCBS
46%
TPBS
10%
157%
100%
Others
27%
ABS
9%
VND
HDBS 8%
6%
HSC
8%
TPBS
19%
Corp bond as % of GDP (inc FI bond)
Source: SBV, Banks, VCBS summary
6
CREDIT:
DIVERGENT CREDIT GROWTH SPEED
Private owned banks with abundant equity capital, dynamic operation approach, rich data and complying with international risk management standards are granted a
higher credit growth limit and have credit growth exceeds the average level of the whole system.
Loan to customers growth CAGR 2018 - 2020
Average: 26,4%
35%
Average: 23,9%
30%
25%
Average: 17,6%
Average: 11,9%
20%
15%
10%
5%
BID
9M.2021 Credit
growth
© VCBS Research Department
9.1%
AGRB
CTG
VCB
6.4%
11.6%
ACB
8.0%
MBB
VPB
TCB
HDB
VIB
TPB
OCB
MSB
15.2%
7.9%
17%
7.6%
10.9%
11.6%
10.2%
17%
Source: SBV, Banks, VCBS summary
7
CREDIT:
MARKET SHARE
Credit market share of private banks continuously improved from 42% in 2015 to 46% in Q3.2021. Besides, thanks to an efficient operating model, the profit contribution
of the group also increased from 39% to 64% in the same period.
Banking system earning contribution
Credit market share
100%
100%
90%
90%
80%
42%
42%
43%
43%
45%
46%
46%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30% 58%
20%
58%
57%
57%
55%
54%
54%
44%
54%
58%
55%
2017
2018
2019
59%
64%
30%
20%
10%
0%
2015
39%
10%
2016
2017
4 SOCB banks
© VCBS Research Department
2018
2019
Private owned banks
2020
Q3.2021
0%
2015
2016
4 SOCB banks
2020
2022
Private owned banks
Source: SBV, Banks, VCBS summary
8
CREDIT:
LENDING RATE
Lending rate
11.00%
Lending rates recorded a decrease of about 1.5% compared to pre-
pandemic level, while deposit rate decreased by 1.7%. The decrease in
10.00%
9.7%
9.8%
9.9%
10.1% 10.1%
lending rates is somewhat slower than the decrease in deposit rates and is the
main reason for the high growth of NIM in the whole industry in the first half
9.9%
9.6%
9.6%
9.3%
9.3%
9.0%
9.00%
of 2021.
State-owned commercial banks recorded a sharp drop in lending rates
8.00%
right from Q2.2020 due to the reduction of interest rates to support the
economy, while private owned banks only recorded a significant decline
7.8%
8.0%
8.1%
8.1%
8.0%
7.00%
7.3%
from Q1.2021.
In the long-term, we expect lending rates to remain relatively high, helping
7.5%
7.6%
7.2%
6.9%
6.8%
6.00%
the industry's NIM to remain positive as the credit growth is capped
somewhat limiting the competition among banks, while the demand for loans
5.00%
of retail customers will remain high for many years to come.
Lending rate of TCB, VPB, MBB, ACB
Lending rate of VCB, BID, CTG
Lending rate of private owned bank
© VCBS Research Department
Source: SBV, Banks, VCBS summary
9
DEPOSIT:
LOW DEPOSIT RATE IS LIKELY TO BE MAINTAIN
Short-term capital for medium and long-term
loans (%)
The average deposit rate decreased by 1.5 - 2% depending on the term compared to pre-pandemic level.
New credit limit were recently granted and banks have only one month left to disburse, putting pressure
40
on interest rates to increase in the short term and a significant increase is recorded in small-scale banks.
30
However, there is not much pressure to raise interest rates in 2022 because: (1) system liquidity is
20
supported by foreign currency purchases by SBV, the amount of VND is added to the system in the second half
10
of the year through this channel is estimated at about VND 200-300 trillion; (2) Related indicators such as LDR,
0
28.8
17.1
CTG
5.50%
4.96%
4.68%
5.63%
4.89%
4.88%
Deposit yield of private owned banks
© VCBS Research Department
TCB
OCB
MSB
Upper limit until 30/09/2022 (37%)
Upper limit untili 30/09/2023 (34%)
Average deposit rates (Unit: %)
Upper limit from 30/09/2023 (30%)
8.00
7.50
7.00
6.50
4.06% 6.00
3.33% 5.50
5.00
3.09% 4.50
4.00
3.50
3.00
Chỉ số LDR (%)
85
82.2
80.2
80
76.7
74.2
75
71.8
70
65.5
65.3
65
60
Deposit yield of group TCB, VPB, MBB, ACB
Deposit yield of group VCB, BID, CTG
VPB
Short-term capital for medium and long-term loans
from international credit institutions instead of domestic sources.
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
31
24.2
Short-term capital for medium and long-term loans are still at safe levels and (3) Some banks can use loans
Deposit cost yield
32.6
CTG
D.R (1 month)
D.R (3 months)
D.R (6 months)
D.R (above 12 months)
VPB
TCB
LDR Q3.2021
ACB
HDB
OCB
MSB
Upper limit (85%)
Source: SBV, Banks, VCBS summary
10
DEPOSIT:
CASA
The whole banking system recorded an increase in CASA ratio to 20.1% in Q3.2021 since term
Demand deposit growth thanks to low term deposit rate
deposit interest rate dropped deeply to a level that is no longer attractive enough, along with the
21%
appeal of other investment channels such as stock and real estate drawing a large amount of cash
20%
outflow.
19%
20.1%
19.9%
18%
Deposit maturities become shorter: the need for increased liquidity in the context of exciting stock
17%
and RE markets has further driven a large part of long-term deposits to be converted to demand
16%
deposits and short-term deposits, thus contributing to a further reduction in the banks’ cost of fund.
15%
19.4% 19.4%
1,600,000
1,400,000
1,200,000
18.7%
17.5%
1,000,000
17.8%
800,000
17.2%
16.9%
600,000
400,000
200,000
0
We believe the deposit rate trend will remain at a low level in the medium term, leading to an
uptrend of CASA ratio.
CASA ratio
CASA and Cost of Funds
50.0%
CASA ratio anh Term deposit rate
8.0%
40.0%
7.0%
6.0%
30.0%
5.0%
20.0%
4.0%
10.0%
2.0%
CASA Q3.2021
© VCBS Research Department
80.0%
70.8%
62.3%
60.0%
4.0%
37.6%
40.0%
20.0%
Cost of fund Q3.2021
6.0%
5.0%
5.5%
20.0%
3.0%
2.6%
1.8%
3.0%
0.0%
Sum of listed banks' CASA
2.0%
0.6%
0.0%
1.0%
0.0%
Vietnam
Malaysia
Casa ratio
Indonesia
Thailand
Deposit rate 12M
Source: SBV, Banks, VCBS summary
11
DOPOSIT:
CUSTOMER BASE
The percentage of Vietnamese population with a bank account is currently 31%, lower than that of other
Number of retail customers (Million)
countries in the region. With the trend of digitalization and the introduction of remote authentication (eKYC)
18
technology to help open accounts without a bank branch, this rate is forecast to increase. Banks that focus on
16
16.8
14
developing customer experience at the current stage can greatly benefit from this trend by increasing customer
base.
12
10
Banks that have recorded a rapid increase in the number of regular customers such as TCB, MBB, TPB, etc. will
have a richer source of deposit and reduce cost of fund in the long term.
Payment account
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
100,000
80,000
60,000
40,000
20,000
0
10.0
7.1
6.0
2.0
6.6
3.8
3.6
3.0
1.9
1.6
1.4
0.0
2019
Số
lượngoftàiaccounts
khoản
Number
© VCBS Research Department
cash/Account
SốAverage
dư TB/tài
khoản
6
3.8
2020
OCB
TPB
MBB
3.6
1.9
VCB
BID MBB TCB HDB TPB
ACB OCB
Propotion of population having bank
account
8.8
4.5
4.0
6.6
0
Digitalization and eKYC help increasing
customer base in some banks
8.0
8.40
8
2
8.40
Triệu đồng
120,000
8.8
4
March 2021 to October 2021, more than 1.8 million payment accounts opened using eKYC.
Thousand of account
12.78
120%
100%
80%
60%
40%
20%
0%
98%
85%
82%
49%
34%
31%
Q2.2021
TCB
Source: SBV, Banks, VCBS summary
12
DEPOSIT:
OFFSHORE FUNDING
Small-scale banks can optimize their capital mobilization thanks to international credit institutions: this source of funding has been used by small-sized banks for many
years. Traditional funding institutions include the IFC and ADB. These organizations often require banks to be granted a limit to use capital for good purposes, have a good risk
management system, etc. The interest rate of these funding is usually float base on Libor and currently at about 1%/year.
In the first half of the year, the cost of converting foreign currency into VND decreased sharply: after receiving foreign currency capital, banks often had to convert to
VND by buying or using SWAP contracts. The annual cost for these contracts recorded a positive decrease in the first half of the year when the market expected the trend of
keeping/increasing in the value of VND. Total cost of foreign currency mobilization decreased to about 4%/year for long term and lower for short term contracts. As a result,
some small-scale banks plan to increase the use of foreign currency deposits to optimize cost of funds.
Offshore funding are used to reduce cost of funds in small-sized banks.
Funding organization
VIB
TPB
OCB
VPB
HDB
MSB
Seabank
© VCBS Research Department
ADB
IFC
IFC
IFC
IFC
ADB
Commerzbank
ADB
Credit limit
Announcement
VND billion
5,980
3,312
USD million
260
144
6,440
2,300
3,450
2,300
690
280
100
150
100
30
Q4.2021
Q1.2020
Q1.2020
Q3.2021
Q2.2020
Q3.2021
Q4.2021
Q2.2021
Source: SBV, Banks, VCBS summary
13
NIM:
UPWARD TREND
NIM is on an uptrend thanks to (1) increasing proportion of retail loans; (2) low credit growth room reduces competition and (3) strict management that prevent cheating
in lending activities. Along with the uptrend of NIM, the downward trend of risk cost also caused the return on the same asset size of banks to increase sharply in the past
few years.
NIM hit a short-term peak in H1.2021 when lending rates fell slower than deposit rates. In particular, the group of private banks benefited more at this stage when there
was no significant pressure on lending rates.
NIM Q3.2021 decreased slightly compared to the first half of the year after SBV called on banks to lower lending rates to support the economy.
Gap between lending and deposit rate
NIM on upward trend since 2014
10.5%
6.00%
5.50%
5.51%
9.5%
9.1%
9.3%
9.4%
9.5%
4.9%
9.4%
8.8%
9.0%
8.9%
8.4%
8.5%
8.5%
5.00%
4.7%
8.1%
4.5%
7.5%
4.50%
4.3%
6.5%
4.00%
3.68%
3.50%
3.30%
3.00%
2.72%
2.50%
NIM - whole system
NIM of group VCB, CTG, BID
NIM of group TCB, VPB, MBB, ACB
NIM of private owned banks
© VCBS Research Department
5.5%
5.1%
5.2%
5.3%
5.2%
5.2%
5.0%
4.1%
4.6%
4.1%
4.5%
3.8%
3.7%
3.7%
3.9%
3.5%
3.7%
2.5%
3.5%
Gap (RHS)
Lending rate
Deposit rate
Source: SBV, Banks, VCBS summary
14
NON-INTEREST INCOME:
ONLINE TRANSFER GROWTH STRONGLY
Number of money transfer transaction
3,000
number of transactions increased by 106% to 2.7 billion items and the value of
2,500
transfer transactions increased by 39% to VND 154 million billion.
In H1.2021, the scale of transfer transactions through the banking system
remained high with 1.5 billion items and VND 71 million billion .
Million transactions
Covid-19 fueled the growth of remittance transactions in 2020 when the
200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
2,000
1,500
1,000
500
0
2017
Propotion of population having credit card
2018
2019
Number of transaction
2020
H1.2021
yoy change
60%
50%
Money transfer transaction value
49%
VND trillion
40%
30%
21%
20%
10%
10%
4%
2%
2%
0%
Singapore
Malaysia
Thái Lan
Indonesia
Philipines
Việt Nam
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
100%
80%
60%
40%
20%
0%
-20%
2017
2018
2019
Transaction value
© VCBS Research Department
2020
H1.2021
yoy change
Source: SBV, Banks, VCBS summary
15
NON-INTEREST INCOME:
BANCCASURANCE
Banks focuses more on bancassurance as many banks recorded impressive growth
Monthly bancassurance sale 2021
in net premium income. Some banks such as TCB, VIB, etc. have built digital
T1
insurance selling platforms to help reduce time and increase efficiency of
bancassurance sales. Commissions paid directly to bank staff have also been
T2
T3
T4
T5
T6
T7
T8
T9
T10
Cumulative
VIB
128
82
161
153
159
159
105
74
104
160
1,285
SCB
110
118
216
165
154
191
116
64
33
94
1,261
In 2022, the market may witness some new exclusive bancassurance contracts
MBB
110
85
146
124
90
113
87
86
113
133
1,087
between CTG - Manulife and HDB when this bank is actively looking for new
ACB
137
84
192
155
142
125
57
33
43
103
1,071
TCB
83
73
132
104
88
118
103
81
86
144
1,012
STB
94
69
132
105
99
69
46
27
36
144
821
VPB
63
52
88
71
65
83
70
51
45
83
671
VCB
34
32
112
76
53
72
36
29
32
63
539
TPB
48
42
56
60
64
71
50
24
30
71
516
HDB
41
25
50
59
53
66
48
34
42
91
509
MSB
31
22
44
32
41
70
54
63
67
75
499
LPB
44
32
60
56
58
60
36
32
36
54
468
OCB
20
17
26
31
32
51
24
16
16
38
271
CTG
18
11
40
36
34
33
17
9
12
18
228
increased in some banks.
partner.
Some exclusive bancassurance deals:
Ngân hàng
Đối tác
STB
TCB
VPB
SHB
OCB
TPB
VIB
VCB
ACB
MSB
CTG
Daiichi
Manulife
AIA
Daiichi
Generali
Sunlife
Prudential
FWD
Sunlife
Prudential
Manulife
© VCBS Research Department
Năm ký kết
2017
2017
2017
2018
2019
2019
2019
2020
2020
2021
NA
Upfront fee
(tỷ đồng)
2000
1446
1600
1000
850
1840
750
9200
8400
2000
NA
Thời hạn (Năm)
20
15
15
15
15
15
NA
15
15
15
NA
Source: SBV, Banks, VCBS summary
16
NON-INTEREST INCOME:
GOVERNMENT BOND INVESTMENT
Government bond investment activities in many banks have recorded high profits for many years when Vietnam's government bond interest rates continuously
decreased. Government bond interest rates at the moment are only 1.95%, 0.72%, 0.58%, 0.48% for terms of 10 years, 5 years, 2 years and 1 year respectively. With the
current low interest rates and little room for further reductions, the government bond investing activitities is expected to face more difficulties in the coming years.
Many banks now record a large amount of government bonds and have held them for many years when interest rates were still high, such as ACB, MSB, and
SSB. These banks in the case of selling the amount of government bonds they are holding can record a large profit.
Government bond portfolio
VN government bond yield
20%
18.2% 120,000
18%
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
16%
14.4% 14.3%
13.6%
14%
80,000
12%
10.1%
6%
4%
9.3%
9.0%
10%
8%
100,000
7.2%
60,000
7.0%
5.9% 6.1% 5.5%
40,000
3.8% 3.3%
3.5%
3.3%
20,000
Feb-19
Sep-19
Apr-20
Nov-20
Jun-21
Jun-14
Jan-15
Aug-15
Mar-16
Oct-16
May-17
Dec-17
Jul-18
Jul-11
Feb-12
Sep-12
Apr-13
Nov-13
Dec-10
2%
0%
BID CTG VCB MBB TCB STB VPB ACB SHB HDB VIB TPB LPB SSB MSB OCB
Gov bond Q3.2021
10y
© VCBS Research Department
5y
2y
% total asset
1y
Source: SBV, Banks, VCBS summary
17
OPERATIONAL COST:
ECONOMIC OF SCALE
The CIR of the whole system decreases year by year: with the largest proportion of operating
expenses being staff salaries and the size of staff at banks decreasing relative to the size of assets,
140.0
Number of employee /1 VND trillion
customer loans
banks are becoming more efficient as asset size increases.
120.0
Number of employee /1 VND trillion
customer loans 2020
CIR 9M.2021
EBT/Nhân
viên
EBT/Employee
80
70
60
50
40
30
20
10
0
30,000
10,000
5,000
0
1,400
VND million
15,000
CIR
1,600
25,000
20,000
100.0
45%
80.0
1,382
40%
35%
1,200
808
800
600 462
448
400
30%
942
1,000
680
607
598
60.0
25%
746 760
539
414
20%
40.0
15%
10%
200
5%
0
0%
20.0
2017
2018
2019
2020
BID
CTG
VCB
Number of employee
ACB
MBB
VPB consolidate
Number of employee /1 VND trillion customer loans
TCB
TPB
MSB
© VCBS Research Department
Source: SBV, Banks, VCBS summary
18
NPL AND PROVISION EXPENSES:
DIVERGENT IMPACT
The ratio of bad debt and potentially risky debt is expected to reach 7.1-7.7% by the end of 2021 as estimated by SBV. However, the increase in bad debt has a clear
level of differentiation among banks:
-
Including about 2-2.5% from SCB, 0.5% from STB; Including about 4% of the restructuring debt balance according to Circular 01, Circular 03 and Circular 14. In 2020, the
amount of restructuring debt has already reached 4% and decreased sharply afterward when the economy was reopened.
-
Real estate is the main collateral for most loans, which is currently increasing in price and bad debt recovery is therefore easier than in the previous period.
-
Some other banks that recorded the proportion of loans secured by cars did not have much difficulty in recovering assets as cars are registered in the bank's name.
-
Many banks with good asset quality did not record new bad debts that increased beyond control.
NPL and Potential NPL ratio
(Calculated by SBV)
12.0%
10.6%
7.4%
5.9%
6.0%
4.0%
4.4%
2.5%
2.0%
2.0%
1.9%
3.8%
1.6%
1.8%
0.0%
2016
© VCBS Research Department
NPL
BID
CTG
VCB
ACB
MBB
VPB
TCB
HDB
VIB
TPB
MSB
OCB
21,433
18,097
10,884
2,823
3,186
12,702
1,829
2,679
3,986
1,377
1,907
1,474
Estimate level at year
end: 7,1 – 7,7%
10.0%
8.0%
Q3.2021
2017
2018
2019
2020
NPL and Potential NPL ratio
NPL ratio
2021E
Restructured Restructured
loans at mid
loans
Allowance
2020
Q3.2021
36,000
NA
11,000
9,000
7,000
27,000
7,900
7,900
600
8,400
1,532
NA
27,000
46,000
9,000
13,000
3,400
15,900
2,800
200
NA
6,500
1,759
2,003
30,055
21,464
26,432
5,580
7,418
6,217
3,373
2,169
2,155
1,590
1,183
1,105
LLCR
140%
119%
243%
198%
233%
49%
184%
81%
54%
115%
62%
75%
Source: SBV, Banks, VCBS summary
19
SECTOR UPDATE 2021
NEW PHASE AND 2022 OUTLOOK
STOCK RECOMMENDATION
© Research Department
20
NEW PHASE:
EFFICIENCY SIGNIFICANTLY IMPROVED AFTER 10 YEARS OF RESTRUCTURE
ROA
ROE
1.2%
1.1%
1.0%
0.8%
0.8%
0.8%
0.7%
0.6%
0.6%
0.6%
1.1%
20.0%
16.7%
0.9%
14.9%
15.0%
12.7%
10.4%
0.6%
16.0%
8.4%
10.0%
8.5%
8.5%
9.9%
0.4%
5.0%
0.2%
0.0%
2012
2013
2014
2015
2016
2017
2018
2019
2020
0.0%
2012
3.6%
2.5%
2012
© VCBS Research Department
2013
2014
2015
1.9%
2016
1.7%
2017
1.6%
2018
1.5%
2019
1.5%
2020
VND Billion
3.0%
1.9%
2014
2015
2016
2017
2018
2019
2020
VAMC bond (exclude SCB and STB)
NPL ratio
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2013
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
69,164
53,856
42,509 46,250
37,893
19,048
8,736
5,191
2013
2014
2015
2016
2017
2018
2019
2020
Source: SBV, Banks, VCBS summary
21
NEW PHASE:
VIETNAM BANKING SYSTEM PHASES
Background: many problems needed solving
2010 - 2015
‐
Economic growth with low quality, high inflation, heterogeneous monetary policy, real estate market collapse, etc.
‐
Lack of regulations in management led to many consequences: overlapping ownership, LBO, loans to related companies, cheating in
interest income recognition, etc.
2010 Law on Credit Institutions stipulates more clearly the ownership ratio of individuals and organizations at banks and related issues
between transactions of banks and insiders.
Project “Restructuring the system of credit institutions during 2011 – 2015” was established with the goal of improving health, safety,
and discipline in the system.
Continuing with the project of restructuring credit institutions in association with debt settlement for the period 2016 - 2020: The
role of VAMC was strengthened.
2015 - 2020
Strict regulations were issued: Circular 41 (Basel 2), Circular 22 (LDR, Short-term capital for medium and long-term loans, ...)
Results: many banks completed writing off VAMC bad debts, ownership at most banks was stable, operational efficiency was increasing.
Level of competition increasing: Since the profitability become more attractive, many banks have changed their strategies to focus more on
growth. Therefore, the level of competition is expected to increase and focus on attracting customers and improving cost of fund while NIM
remains high thanks to the policy of "room" for credit growth.
2020 – 2025
(Forecast)
Digital transformation, digital banking and ecosystem are the goals being pursued by many banks. Initial success has come to banks that
are meeting the diverse needs of customers by acquiring a lot of data.
Covid-19 causes bad debt of the whole industry to increase; however, the overall level of influence will be much lower than during the
crisis period of 2012 - 2013 and there is a strong divergence among banks.
© VCBS Research Department
Source: SBV, Banks, VCBS summary
22
NEW PHASE:
TECHNOLOGY WILL PLAY A BIGGER ROLE IN THE BANKING INDUSTRY
Technology is gradually penetrating the banking industry:
‐
Automated banking (TPB livebank, MBB smart bank): customers can open cards, top up
and withdraw money with their fingerprints.
‐
Loan pre-approval: the bank links with entities that have data (e.g. telecommunications
companies, fintech companies, etc.) to perform customer analysis and to recommend
services to customers, even those who have not used the bank's services.
‐
Customer scoring system: when customers come to make a transaction or call to the
service center, the system will automatically identify and predict customer needs, thereby
saving time for customers.
‐
eKYC – remote identity verification technology
‐
Robots automate simple operations.
‐
Open Core Banking Platform - Open API
Survey on popular payment method in China
2017
100%
84%
80%
Many technologies require large amounts of data input. Understanding data helps
some banks stay ahead of others in digitization and in other activities such as credit
growth, customer attraction, etc.
60%
Fintech: the role of fintech companies in Vietnam is still limited and difficult to thrive
without permission from the authorities to provide traditional banking services
(mobilization, lending, investment) Asset Management,…)
0%
© VCBS Research Department
40%
20%
65%
33%
14%
Source: SBV, Banks, VCBS summary
23
2022 OUTLOOK:
MANY BANKS CONTINUE TO RECORD HEALTHY PROFIT GROWTH
Credit demand remains positive and the credit growth rate of the whole industry will reach 13-15% in 2022.
-
-
Total EBT of listed banks
Banks with high CAR and dynamic operating models will continue to be granted credit growth room higher than the
60,000
industry average.
50,000
52,177
Short-term NIM peaked at H1.2021 and started to decline slightly:
40,000
NIM of private owned banks decreased slightly by 0.1 - 0.2% in 2022. Lesser decline is expected at banks that can
30,000
further improve their cost of funds.
20,000
46,916
39,445
Q1
NIM of state-owned banks will remain as they are, but can improve dramatically in case lending rate support packages
Q2
2019
2020
Q3
2021
42,719
Q4
are stopped.
Historical Median P/B of banking stocks
Bad debt and restructuring debt depend a lot on the situation of the pandemic. In the base case, we forecast that the
industry NPL will increase when restructured debt reaches maturity and the rate of restructured debt decreases rapidly
2.80
from Q4.2021. However, banks that we consider having good asset quality will not face much pressure on provisioning.
2.30
We forecast that PBT of the whole banking industry will have a positive growth in 2022. However, there will be a
1.80
Present:
2.08x
Historical
average:
1,49x
clear level of differentiation. Private owned bank that can further improve cost of funds will have more growth potential.
1.30
Banks that can achieve high profit growths of above 20% include: BID, MBB, TCB, ACB, TPB, MSB.
0.80
Profits on baking stocks will no longer record a surprisingly high returns at all banks as in the first half of 2021.
Meanwhile, the valuation of banking stocks is higher than the past average. Therefore, share prices of banks in 2022
are expected to have a strong divergence according to growth rates and specific corporate events.
© VCBS Research Department
Source: SBV, Banks, VCBS forecast
24
2022 FORECAST:
SOME BANKS HAVE ATTRACTIVE VALUATIONS THANKS TO HIGH GROWTH
The high growth rate of credit led to a high growth rate of profits and equity at some banks, that makes the P/B forward ratio at an attractive level.
2.00
1.90
1.80
1.70
1.60
1.50
1.40
1.30
1.20
1.10
1.00
P/B forward 2022
1.92
1.77
1.61
1.57
1.62
1.47
1.41
1.34
BID
ACB
MBB
TCB
HDB
TPB
OCB
MSB
EBT 2022F
23.071
13.990
18.676
26.693
9.410
7.322
5.846
6.733
Yoy growth
55%
17%
25%
20%
16%
25%
11%
26%
ROAE 2022F
17%
22%
23%
21%
21%
20%
19%
22%
Note: P/B forecast has the following assumptions: (1) HDB signs an exclusive insurance agreement in 2022 and records it in 2 years; (2) OCB successfully issued 70 million
shares to foreign investors at the price of 30,000 VND/share; (3) MSB recorded part of the profit from selling FCCOM in 2022.
© VCBS Research Department
Source: SBV, Banks, VCBS forecast
25
