BUSINESS OUTLOOK 2023

Based on a conservative view, we temporarily put a conservative credit growth expectation of 15% for VIB in 2023 (although the bank’s plan is 25%). Signs of cooling off in the deposit rate help reinforce the expectation that banking NIM will be flat this year at 4.6%. Strength in insurance and card activities led to a positive growth of 18% in service income. CIR is properly managed at 35% while provision expense for credit risk continues to increase in the context of increasing bad debts along with expanding credit scale. With the above assumptions, we estimate the bank’s pre-tax profit will grow by 22% in 2023, equivalent to VND 12,900 billion.

RECOMMENDATIONS

In the long term, we believe that VIB’s growth prospect is still promising with the current credit scale being quite modest compared to the leading joint stock commercial banks.

We recommend “Buy” on VIB stock, with a 1-year target price of 25,000/share, equivalent to an investment rate of return of 19%. However, it is necessary to carefully consider the appropriate disbursement time in the context that the stock is currently trading at a less attractive P/B of 1.3x that is higher than the industry average.