VPB_Company Update_Mar 23

We increase our 2023E loan growth assumption by +3ppt to 20% YoY. VPB is set to receive a higher-than-sector-average credit quota due to its takeover/restructuring of a weak bank. However, 2023E NIM will be constrained by rising funding costs and a lower CASA ratio.

We forecast adj. TOI to increase by only +6% YoY given the high basis of comparison from 2022, when VPB recorded a substantial one-off gain from a bancassurance tie-up.

We assume VPB’s credit costs to increase given potential rising NPAs related to the real estate sector. VPB has high exposure to corporate bonds (6.4% of total assets and 39% of total equity). We factor in higher provisioning as a prudent method of valuing the company.

We reduce our PATMI forecasts by -34% for 2023E with increased provisioning as the key drag. Our new forecasts imply a 2023 earnings decrease of -9% YoY, or an increase of +21% YoY after stripping out the one-off income from the upfront banca fee in 2022.

Our new PATMI forecast is -10% lower than the consensus for 2023E. We believe that our provisioning assumption is higher than the Street’s.

Capital is very strong, perhaps the highest among all banks in Vietnam, after selling the FE Credit stake and given its capital raising plans in 2023E. However, the prospective capital increase could be delayed due to banking sector risks related to real estate.

We maintain BUY but with a cautious outlook given VPB’s high exposure to corporate bonds and its low LLR ratio. VPB trades at 1.0x 2023E P/BV in line with the sector median, given its 2023E ROE of 15% (on our forecast) vs the sector median of 19% (Bloomberg consensus). Our new target implies +26% 12-month total shareholder returns.

For a complete report, please access here: VPB_Company Update_Mar 2023

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