FREE

ACB - An Attractive and Safe Choice Amid Macroeconomic Volatility

Q4-FY25: Profit drops sharply by 39% YoY due to a sudden surge in provision expenses
• Q4/4Q25 PBT declined sharply by 39% YoY and dragged down the full-year 2025 PBT growth by 7% YoY (fulfilling 85% of the plan), due to 4Q25 provision expenses surging 13 times over the same period in an effort to enhance asset quality to the best level in 3 years - the NPL ratio dropped to 0.97% (3Q25: 1.09%) and the NPL coverage ratio reached 114% (3Q25: 84%).
• Credit growth (parent bank) reached 17.5% YTD, lower than the full-year credit quota (over 18%), with large corporate credit maintaining strong growth momentum (+62% YTD) while retail credit sustained an average growth rate (+13% YTD).
• 4Q25 NIM remained at a multi-year low around 2.95%. 2025 ROAA and ROAE declined to 1.7% (-50 bps YoY) and 18.0% (-4.3 ppts YoY), respectively, following the underwhelming profit performance.
Outlook for Q1-FY26 and 2026
• ACB recorded pre-tax profit (PBT) of approximately VND 5,400 billion (+17% YoY, completing 24% of the full-year plan). Credit growth: 3.2%; Mobilization growth: 0.9%; CASA ratio: 22.9%; CIR: 31.8%; bancassurance recovered strongly at +33% YoY. Asset quality remains well-controlled with NPL below 1% (2025: 0.99%), among the lowest in the sector. The 1Q26 profit figure is broadly in line with our prior forecast of 19% YoY PBT growth.
• For 2026, we forecast credit growth to reach 15.2% and NIM to improve by 20 bps YoY to 3.1%, helping net interest income grow by 24% YoY to VND 33,300 billion. Consequently, projected total operating income (TOI) increases by 22% YoY. We expect the CIR to increase sharply to nearly 35% due to the simultaneous implementation of multiple digital transformation initiatives in 2026, and credit costs to decrease by 10 bps to 0.4% following the extraordinary provisioning in 2025. Projected PBT regains strong growth momentum at 24% YoY, after two years of foundation building in 2024-25.
View and Recommendation
We maintain a BUY recommendation for ACB with a target price of VND 30,900 per share, a 4% decrease from the previous target price to reflect (1) the increase in the cost of equity after the 5-year and 10-year risk-free rates rose by 80 bps YTD and 20 bps YTD, respectively, and (2) the decline in ROAE following the underwhelming 4Q25 profit performance. We maintain the target P/B multiple at 1.30x in this Update Report, with the projected average ROAE for 2026F at 19.1% (+150 bps YoY) and for the 2026F-31F period at 20.6%, implying prospects for operational efficiency improvement after 2025 which recorded a sudden surge in credit costs.
ACB's trailing P/B valuation is currently at 1.29x – one standard deviation below its 5-year average of 1.45x – and the 2026F projected P/B is only 1.11x. We consider the current valuation highly attractive for a bank with the best asset quality among joint stock commercial banks, strong resilience to NPL risks in the volatile interest rate environment of 2026, a capital adequacy ratio (CAR) of over 12%, along with solid prospects for ROAE improvement from a low base.