Q1/25 PBT recorded VND 893 billion, a sharp decline compared to the previous quarter and Q1/24 (-39% QoQ, -26% YoY), achieving only 17% of the full-year target (over VND 5.3 trillion), mainly due to a contraction in non-interest income including FX trading income (VND 7 billion, -94% YoY) and government bond invesment (-VND 100 billion vs. a gain of VND 15 billion in Q1/24). 

Credit growth reached 2.2% YTD (Q1/24: 2.5% YTD), with slower growth in the corporate lending portfolio (2.2% YTD vs. 5.3% YTD in Q1/24), while retail credit showed a significantly better performance YoY, growing 2.3% YTD (Q1/24: -2.4% YTD). NIM stood at 3.2% this quarter, with an 80 bps decline QoQ due to: (1) 60 bps drop in asset yields from lower lending rates to support customers, (2) 30 bps rise in funding costs from increased mobilization efforts since Q1, (3) sharp rise in new NPLs formation. 

Asset quality deteriorated as new NPLs formation surged (VND 1.6 trillion). Combined with a low provisioning level this quarter (credit cost dropped to 0.2%), this led to the lowest adjusted NPL coverage buffer (including debt pending for foreclosed assets settlement) since 2019, at just 30.5%. 

We revise our 2025F PBT forecast to VND 5,030 billion (+26% YoY), with expected credit growth of 20.4% and NIM of 3.4%. OCB stock is valued at VND 12,600/share, with a current P/B of 0.82x based on closing price as of April 29, 2024.