Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Thematic (Sector/Industry)

Vietnam Financials / Thematic (Sector/Industry)

PH Score™   9.0There have been some strong PH Scores™ out of Vietnam again this quarter as well as Malaysia, Colombia, China SOEs, and Pakistan to name but a few. Regarding Vietnam, LPB catches the eye as shares look oversold at this juncture, a reflection of excessive pessimism, -related in great part to wave 4 of C-19- given the fundamental momentum underway.We are mindful of the fact that the Vietnamese financial system is still quite immature, as it transitions to Basel 11, and there is ample scope to “catch up” regarding best practice, disclosure, and overall governance. In the case of LPB, there is now at least greater regulatory oversight than before with transition to the main market.LienViet Post JSCB dedicates itself to mainly corporate, SME, and rural market and to a lesser extent the consumer segment (25% of credit), backed by source of funding from especially time deposits and some transaction accounts.LTM Q221/20 results show positive fundamental momentum and trends with improvement in Profitability, in NIM/Spread, in Efficiency, in Liquidity, in headline Asset Quality (given the expansion of the denominator), and in Provisioning while Capital Adequacy showed some lightweight erosion. Growth in “Core Income” was robust, given the inflation of the Balance Sheet, while “non-core Income” streams showed dynamism, which together more than offset the sharp increase in LLPs given Asset Quality issues. While the bank charged-off much more bad debt than historically, new net NPLs (not especially elevated as a % of Loans) actually fell YoY suggesting that the worst of the Asset Quality challenges may be behind the bank for now. Of course, this is dependent on institutional procedures and processes at the bank safeguarding the quality of vibrant credit growth underway.Valuation could be arguably more enticing but it is reasonable and should not detract from prospects of economic recovery and earnings rebounds ahead as C-19 stabilizes and the Asset Quality damage at the bank reverses.

PH Score™   9.0There have been some strong PH Scores™ out of Vietnam again this quarter as well as Malaysia, Colombia, China SOEs, and Pakistan to name but a few. Regarding Vietnam, LPB catches the eye as shares look oversold at this juncture, a reflection of excessive pessimism, -related in great part to wave 4 of C-19- given the fundamental momentum underway.We are mindful of the fact that the Vietnamese financial system is still quite immature, as it transitions to Basel 11, and there is ample scope to “catch up” regarding best practice, disclosure, and overall governance. In the case of LPB, there is now at least greater regulatory oversight than before with transition to the main market.LienViet Post JSCB dedicates itself to mainly corporate, SME, and rural market and to a lesser extent the consumer segment (25% of credit), backed by source of funding from especially time deposits and some transaction accounts.LTM Q221/20 results show positive fundamental momentum and trends with improvement in Profitability, in NIM/Spread, in Efficiency, in Liquidity, in headline Asset Quality (given the expansion of the denominator), and in Provisioning while Capital Adequacy showed some lightweight erosion. Growth in “Core Income” was robust, given the inflation of the Balance Sheet, while “non-core Income” streams showed dynamism, which together more than offset the sharp increase in LLPs given Asset Quality issues. While the bank charged-off much more bad debt than historically, new net NPLs (not especially elevated as a % of Loans) actually fell YoY suggesting that the worst of the Asset Quality challenges may be behind the bank for now. Of course, this is dependent on institutional procedures and processes at the bank safeguarding the quality of vibrant credit growth underway.Valuation could be arguably more enticing but it is reasonable and should not detract from prospects of economic recovery and earnings rebounds ahead as C-19 stabilizes and the Asset Quality damage at the bank reverses. 

LPB: Oversold Given Value-Quality Characteristics