[MBB_1H19] Earnings boost on superior loan growth and strong bancassurance results

BUY

Current price (07-22-2019): VND 22,200

Target price: VND 29,880

Upside:  35%

MBB reported strong 1H19E preliminary PBT of VND4.9 tn, +27% YoY, 49% of full-year guidance and our 2019E forecast. We expect NIM to further increase thanks to a superior loan growth and a high CASA ratio (33% as at 2Q19E), and fee income to be higher supported by bancassurance. The stock is cheap despite scoring very highly on our CAMEL analytical framework, and we reiterate our Buy rating.

Preliminary net interest income of VND 4.4 tn in 2Q19E (+6% QoQ, +25% YoY) and VND8.5 tn in 1H19E (+25% YoY) fulfilled 47.4% of our 2019E forecast. Loan growth reached 11% YTD. The SBV initially set MBB’s credit growth quota at 13% for 2019 but more recently increased the quota to 17% (vs. our full-year forecast of 16% growth), due to MBB’s early Basel II compliance.

Bancassurance drives extremely strong fee income growth. Fee income reached VND 1,055 bn in 2Q19E (+39% QoQ / +59% YoY) and VND 1,813 bn in 1H19E (+85% YoY). Bancassurance fees accounted in 1H19E were up 155% YoY to account for 58% of total fee income during the first six months of 2019.

Provisioning jumped significantly in 2Q19E, with VND1.4 tn (up 45% QoQ and up 47% YoY). Total provision in the 1H19 was up 44% YoY.

Asset quality remains solid. MBB’s NPL ratio fell to 1.26%, down 7bps HoH and 24 bps lower than the bank’s initial target of 1.5%. Notably, Category 4 NPLs were up 73% HoH, but Category 5 NPLs declined 67% HoH.

Preliminary 2Q19E PBT was VND2,451 bn (up 1% QoQ and up 28% YoY), and 1H19 PBT was VND4,875 bn (up 27% YoY), completing 49.3% of the Bank’s full-year target and 48.9% of our 2019E forecast.

We reiterate our Buy rating (see our initiation for details).

For the complete report, please access here: [MBB_1H19] Earnings boost on superior credit growth and strong bancassurance results

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