HDB - Pressured by the Covid-19 yet outlook remains constructive
Currently HDB’s income growth is still primarily driven by net interest income, while other income streams remains limited, especially under unfavorable economic conditions. For 2020, net interest income is expected to stay strong, but service income is likely to pick up only until the exclusive bancassurance agreement is finalized (expected by 2H2020). Regarding expense, in 1Q the bank has accumulated some reserves for trading & investment securities, operating and provision expenses just in case of a worsening virus situation. We expect that this relatively prudent provisioning will be able to moderate the virus impact on the bottom line in the next quarters.
Considering the bank’s solid financials and resilience towards epidemic impact, we raise HDB’s target price to VND 31,000, equivalent to a potential upside of 14% versus the current market price. We recommend to ACCUMULATE the stock.
Ho Chi Minh City Development Joint Stock Commercial Bank is a Vietnam-based financial intermediary. The Company is primarily involved in commercial banking activities, including accepting deposits; granting personal and business loans; issuing debit and credit cards, and providing remittance, letter of credit and debt collection services. The Company's other undertakings consist of foreign exchange dealing, stock trading and equity investing.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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