MBB – Credit cost pressure eased
- 1Q23 results witnessed a cooled off momentum across all sources of income, resulting in a modest top-line growth of 3% YoY. Net interest income reached VND 10.2 tn (or USD 433 mn), up by 22% YoY and continued to expand its contribution to total operating income amid challenges on the service activities front. Meanwhile, non-interest income dropped 20% QoQ and 48% YoY. PBT grew by a greater extent compared to TOI, +10% YoY, ending at VND 6.5 tn (or USD 276 mn) owing to credit cost reductions.
- SBV has released Circular 02 on April 23rd that provides a backdrop for banks to retain loan group and smooth provisioning expenses for the next couple of quarters. In 2023, TOI is expected to be boosted by interest income while non-interest income might encounter difficulties due to unfavorable conditions for life insurance activities, IB and securities trading. The forecast of NPAT for 2023-2024 are VND 20,011 (or USD 846mn, +15%) and VND 23,348 bn (or USD 987 mn, +17%), respectively. Correspondent book value will be 20,600 and 25,000, respectively. We see valuation pressure coming from the weak market sentiment and probability of non-performing loan formation. The stock price has come to attractive valuation.
- In the time to come, as the bank’s core advantages on the interest income front regarding high yields and low costs of funds remain, coupled with potential from fee income sources and consumer finance segment, we expect MBB to return to its growth trajectory by riding on affordable funding costs when market conditions become more favorable in 2024. Our current target price is VND 22,000/share, offering an upside of 17% from the closing price as of May 31st, 2023, hence we recommend to ACCUMULATE this stock for long term investment.
Military Commercial Joint-Stock Bank (MB) is a Vietnam-based financial institution. It is engaged in the offering of commercial banking services and derivative products. The Bank also acts as an insurance agent and provides related services. It is involved in the trading of bonds and other valuable papers, as well as the trading and processing of gold. In addition, the Bank is engaged in monetary intermediation activities. As of December 31, 2011, the Bank had five subsidiaries, three affiliates, one branch in Laos, one branch in Cambodia, 53 branches, 118 transaction offices, four saving funds and four transaction points in cities and provinces throughout Vietnam. As of the same date, its subsidiaries included MB Securities Joint Stock Company (MBS), MB Fund Management Stock Company (MBCapital) and MB Assets Management Company Limited (AMC).
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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