STB_1Q19 results bolster confidence

BUY

Current price (04-23-19): VND 12,050

Target price: VND 14,049

Upside:  17.1%

Summary: STB beat expectations with 1Q19A net income of VND 844bn, an increase of 113% YoY. The share price closed up 4% DoD, indicating that the Street liked the bottom line, which was likely boosted by loan loss recoveries. However, we are more impressed by the continued turnaround in STB’s underlying earnings drivers – net interest income, fees, and cost efficiencies. The results boost confidence in our BUY rating on STB – a turnaround story for the long haul.

Net interest income +16% QoQ / +47% YoY. The details are unclear, but we believe this was driven by a continued shift in the balance sheet as nonperforming assets are run down and funding is shifted to interest earning assets, as well as from organic new loan growth. NPL-related receivables declined by VND 3.2 trillion (-7%) from the start of the year, with the majority of asset growth (+5% QoQ) coming from net loans (+6% QoQ).

Fee income (-30% QoQ / +18% YoY) was also a highlight despite the sequential decline. We believe the 4Q18 number was boosted by lumpy bancassurance-related income as STB has reported yearly-high quarterly fee income figures in both 4Q17 and 4Q18.

For the complete report, please access here: STB_1Q19 results

Analyst: Tanh Tran, tanh.tran@yuanta.com.vn