MBB_AGM Takeaways

Key Takeaways

MBB targets 2020E PBT of VND9.0 tn (-10% YoY). The bank estimates 1H20 PBT to reach VND4.5 tn, representing 50% of the bank’s full-year target and 41% of our estimate.

The bank targets credit growth at 12.0% YoY (vs our forecast of 13.5%). In the first 5M, credit growth reached about 4.5%, largely attributable to SME loans.

Stock dividend at 15% of par value is to be paid in 3Q20 or 4Q20, resulting in an additional 361 mn new shares. MBB also plans to distribute its remaining treasury shares of 25.6 million in 4Q20 or 1Q21, although the specifics of the latter plan are not entirely clear.

NPL ratio target is below 1.90% vs. our forecast of 1.38%. 1Q20 NPL was 1.61% (+45bps YTD), mostly from SMEs.

MBB plans to list its P&C insurance subsidiary, Military Insurance Corporation (MIC) on HSX in 2020.

Our view

Our 2020E PBT forecast of VND11.1 tn (+11% YoY) as outlined in our most recent update in April 14 appears high vs. guidance. For example, our 2020E PBT forecast is 23% above the bank’s target and 12% above the consensus.

Capital adequacy. MBB’s CAR (under Basel II) was 10.1% as at 4Q19 (most of it is Tier 1 capital with 9.0%), which is above the 8% minimum requirement for CAR. Thus, we believe that MBB’s decision not to pay a cash dividend is entirely due to the SBV’s prudential guidance for all the banks rather than a pressing need for capital retention.

King of CASA. MBB has the highest CASA ratio in the sector at 33% in 1Q20 vs. the sector median of 12%. This is a competitive advantage vs. its peers in cushioning the NIM downside risk as banks to cut lending rates to support Covid-impacted borrowers.

Reiterate BUY. We may have overshot our earnings projections for 2020E, but we still like MBB. At market price, the stock trades at 0.9x 2020E P/BV or close to 1.0x P/BV after the 7-9% prevailing FOL premium. Both valuations are attractive vs. our expected 2021E ROE of 18.5%. Our fair value-based target price of VND25,900 implies 48% upside, and we maintain our BUY rating.

For the complete report, please access here: MBB_AGM Note_24.06.20

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