STB_Preliminary 4Q19

BUY

Price: VND9,940 (18 Dec 2019)

Target price: VND14,049

Upside: 41%

Events

• STB’s preliminary 4Q19 PBT is reported to be down -33% QoQ and -26% YoY (source: Cafef).
• However, the reported 2019 PBT (+42% YoY) is 102% of our full-year forecast and 120% of full-year guidance.
• These reported preliminary results are reported by a domestic website and do not include the full financial statements.
• The report does not include sufficient information to enable us to calculate 4Q19 total NPAs However, the bank’s reported 4Q19 NPL of 2.00% was flat QoQ but declined 20bps YoY.

Our Take
Credit growth reached 15.3% YoY, higher than the initial quota of 7% disclosed at the beginning of the year. We believe that the higher level of credit growth helped boost STB’s full-year net interest income by 18% YoY.

4Q19 bottom line declined. PBT reached VND689 bn in 4Q19, down -33% QoQ and -26% YoY.
However, full-year PBT was up sharply. Preliminary 2019 PBT reached VND3.2 tn (+42% YoY), completing 120% of the bank’s full-year target and 102% of our forecast.
Asset quality has continued to improve. We have yet to see the breakdown of NPAs, but the bank reported that its preliminary category 3-5 NPL ratio was below 2.00% (flat QoQ but down -20bps YoY).

We reiterate BUY on STB, which we view as a turnaround story given its strong core business performance and improving asset quality. Total non-performing assets have fallen steadily in recent quarters, declining 27% of total assets at the peak in 4Q17 to 17% of total assets in 3Q19. We believe that this trend continued in 4Q19 given write-offs of legacy NPAs and growth of new (performing) assets.

For the complete report, please access here: STB_4Q19 Preliminary_Express Note

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