·         ACB recorded a Total Operating Income (TOI) of VND 8 trillion in Q2/23, representing a YoY increase of 16%. This growth was driven by an increase in Net Interest Income (NII) to VND 6.24 trillion (+11% YoY) in combination with a strong contribution from non-interest income sources. Despite maintaining a robust YoY growth of +16% in total operating income, the bank decided to normalize its provision expenses at VND 706 billion, compared to the reversal of debt restructuring provisions in Q2/2022. This normalization resulted in a 1.7% YoY decrease in ACB's Profit before tax (PBT) which reached VND 4.8 trillion in Q2/2023.

·         The non-performing loan (NPL) ratio for ACB's customer loans increased to 1.07%, marking a 10-basis point rise compared to the previous quarter and a 30-basis point increase compared to the same period last year. Meanwhile, on-balance sheet NPLs were recorded at 0.96%, with the remaining increase being attributed to when cross-referencing with CIC (Customer ACB's NPLs at other banks). The provision expenses amounted to VND 706 billion in Q2/23. The bank noted that this provision was significantly higher due to the provisions set aside for bad debts by CIC. ACB expects to reverse this provision in the latter half of the year concerning the CIC's provisions.

·         With an appropriate growth strategy, ACB can cautiously expand its lending activities to maintain a healthy and balanced portfolio while efficiently allocating capital. This approach helps in controlling credit costs and ensuring good profitability. It also strengthens the bank's resilience in various scenarios, particularly in a challenging economic environment that may persist in 2023. We maintain our BUY recommendation for ACB with a target price of VND 29,000 per share, equivalent to a 26% return based on the closing price on Sep 6, 2023. Our projected PBT for 2023-2024 is VND 19,979 billion (+16.7%) and VND 23,164 billion (+16%), respectively.