ACB_Company Update_Jan 2023

We increase our 2023E net interest income forecast by +5% to VND25.6 tn, implying growth of +13% YoY after retaining loan growth forecast at +15% YoY but bumping up our NIM assumption to 4.22% (+3bp YoY). The bank’s LDR of 83% should remain below the SBV’s cap of 85%.

We reduce our provisioning forecast by -51% vs. our previous forecast to VND812 bn in 2023E (+62% YoY) given ACB’s strong asset quality and lack of exposure to corporate bonds.

Net-net, we raise our earnings forecasts slightly by +7% for 2023E to reach VND16 tn, implying earnings growth of +15% YoY.

Yuanta vs. the Street. Our earnings forecast is now +9% above the consensus for 2023E, which is likely due to our relatively low provisioning assumption.

Strong asset quality. ACB’s NPL ratio is relatively low at 1.01% with LLR ratio of 138% as at 3Q22. Specifically, ACB has no exposure to corporate bonds (including, of course, real estate corporate bonds), which makes it less vulnerable to real estate market risks compared to other banks.

Maintain BUY. ACB trades at 1.0x 2023E P/B, in line with the sector median. We cut our target price by -12% to VND27,958 based entirely on the increased discount rate (i.e., the 12-m SOE bank deposit rate, which has increased +2ppt since our last model update. Our new target price implies 2023E P/B of 1.3x.

We believe that ACB deserves a premium over its peers given its strong operational results and solid asset quality. We expect 2023E ROE to reach 24% in 2023E compared to the sector median of 18%.

For the complete report, please access here: ACB_Company Update_Jan 2023

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