BUY

Current price (07-15-19): VND 73,700
Target price: VND 75,270
Upside: 2.1%

Event catalysts

• Rising NIMs from the shift to retail lending with funding costs capped by high CASA.
• B-2 compliance gives VCB a strong case for a higher loan quota than the sector.
• Bancassurance could represent a large one-off gain in 2019E or 2020E and a new source of steady fees thereafter.

VCB reported 2Q18-2Q19 NIM of 3.22%, up from 2.90% in 2018A. We think the increased NIM reflects the bank’s successful shift into retail banking. Retail loans increased from 46% of total loans as at 2018A to 48% as at 2Q19E.

Preliminary 1H19 PBT of VND11.3 tn was up 41% YoY and a record high. This completed 55% of the bank’s full-year target and 53% of our forecast.

Asset quality continues to be strong. In particular, that the bank’s loan loss coverage remains very conservative at 180% in 2Q19E, compared to 165% in 2018A.

Our view: We expect increased NIM due to the shift to retail lending, with funding costs capped by the CASA franchise. VCB appears to have made solid progress in delivering this in 1H19E. Despite the stock’s extremely strong YTD performance, we think investors should continue to view it as a core holding. For further details,  please see our initiation.

For the complete report, please access here: VCB_1H19 NIMs rise on the shift to retail lending

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