(EN) GTJASVN Research_Banking Sector_Q1.2025 Earnings Update_ACCELERATED MOMENTUM WITH POLICY HIGHLIGHTS AND STRATEGIC SHIFTS_May 2025

Banking Sector Q1/2025 Earnings Update: Accelerated Momentum Amid Supportive Policies and Strategic Shifts In Q1/2025, the Vietnamese banking sector maintained positive momentum, supported by robust policy initiatives and an ambitious 16% credit growth target. Key regulatory highlights include Decree 69/2025 (raising foreign ownership limits for restructuring banks), the proposal to legalize collateral seizure, and new rules on deposit certificates issuance—all aimed at enhancing capital access and bad debt resolution. Credit growth reached 3.95% YTD, with strong performance from retail-focused banks (e.g., SHB, MSB, VPB, TPB). However, narrowing net interest margins (NIM), rising non-performing loans (NPL ratio: 4.3%), and moderate non-interest income pressured profitability. Despite these challenges, total sector pre-tax profit rose slightly by 1.8% QoQ and 14% YoY, with standout growth from select small and mid-sized banks such as SSB, KLB, and ABB. Stock valuations have rebounded, led by banks with strong narratives like STB and TCB. Amid macro uncertainties, banking remains a preferred sector thanks to its resilience and policy tailwinds. Recommended stocks: VCB, CTG, BID, TCB, VPB, MBB.