MBB_2Q21_Earnings Review

MBB’s 2Q21 preliminary PBT was about VND3.4 tn (-25% QoQ/+17% YoY). High credit growth and efficient cost management were positives, but high provisioning costs were a drag on earnings. 1H21 PBT was about VND8.0 tn, fulfilling 61% of MBB’s full-year target and 56% of our 2021E forecast.

Credit growth was 10.5% YTD (including corporate bonds) to reach VND340 tn. The bank reported that its loan market share was 4.9% (+20bps YTD) as at 2Q21.

Cost to income ratio (CIR) decreased to 28.6% (-1.9ppt QoQ/-8.4ppt YoY).

The bank’s NPL ratio declined significantly to 0.76% (-33bps YTD).

MBB’s LLR ratio jumped to 311% (+177ppt YTD) in 2Q21. This exceeds VCB’s 1Q21 LLR ratio of 279%, and it is probably the highest reserve coverage ratio in the sector in 2Q21.

As a result, 2Q21 PBT was about VND3.4 tn (-25% QoQ/+17% YoY), which was dragged down by the high provisioning cost.

Our view

We believe that our 2021E profit forecast for MBB is achievable given the higher-than-guidance credit growth and high cost efficiency.

Asset quality remains solid. We strongly believe that the bank’s increased provisions and LLR reflect a prudent approach to preparing for an unpredictable future. We think that MBB is taking the right approach by building up its loan loss reserve buffer to weather the probable asset quality deterioration in the medium term.

MBB trades at 2.0x 2021E P/B, which is in line with the sector median despite its superior operational quality vs the sector. We believe that MBB deserves a premium over its peers, and we maintain our BUY rating. However, MBB’ stock price has increased 71% YTD and 52% since our recent company update in March, and we would recommend to wait for a pullback before accumulating the shares.

For the complete report, please access here: MBB_2Q21_Express note

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