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MBB - Solid Competitive Edges to Drive Positive Growth Outlook

1Q2025: Strong Revenue Growth from Low Base Drives 45% YoY PBT Increase
• The key driver of net interest income growth (+29% YoY) was a combination of robust credit expansion (+27% YoY and 2.2% YTD) and a NIM of 4.2%, up 15 bps YoY, benefiting from a low base in the prior year, which was impacted by the reversal of accrued interest following a sharp rise in NPLs.
• Non-interest income growth (+23% YoY) was notable, driven by a 54% YoY increase in revenue from insurance activities (MBAgeas Life and MIC) and robust recovery of written-off bad debts, reaching VND1 trillion, 2.8 times higher YoY and up 45% QoQ.
• The consolidated NPL ratio rose 22 bps QoQ to 1.84%, with net NPL formation unexpectedly increasing by VND5.6 trillion (0.7% of credit scale). Credit costs stood at 0.4%, causing the NPL coverage ratio to decline from 93% at the end of 2024 to 76%.
2025F-26F Outlook
• We project credit growth of 26% in 2025F and 25% in 2026F, leveraging high credit growth quotas following the mandatory transfer of Ocean Bank (now MBV). Competitive advantages in funding costs compared to other joint-stock commercial banks and a robust digital platform are expected to expedite loan disbursements.
• Consolidated NIM is forecast to decline slightly by 7 bps to 4.02% in 2025F before recovering to 4.07% in 2026F. The 2025F NIM reduction is less severe than the average decline among the banks we track (-20 bps), supported by the low base in 2024 due to elevated NPLs and MBB’s industry-leading CASA ratio in 1Q25.
• Net profit attributable to parent company shareholders is projected to reach VND24.9 trillion in 2025F (+10% YoY) and VND31.2 trillion in 2026F (+25% YoY).
Valuation and recommendation
We maintain a positive outlook on MBB’s prospects, forecasting a 19% profit CAGR over 2025F–28F. Key growth drivers include rapid scale expansion, capitalizing on competitive advantages in funding costs, a comprehensive financial group model, and a robust digital banking platform to optimize high credit growth quotas post-Ocean Bank transfer. We expect MBB’s NIM to be less impacted than that of other joint-stock commercial banks amid current competitive pressures, driven by its large, diverse, and loyal customer base, which supports its CASA advantage and better funding cost control. Additionally, MBB may participate in bidding for State Treasury deposits, as the state ownership ratio is expected to exceed 50% following treasury stock repurchasing and private placement plans. Net NPL formation is anticipated to peak in 2025, with improvements expected as legal hurdles for major clients in real estate and renewable energy are resolved.
Using a combination of the Residual Income and P/B valuation methods, we derive a target price for MBB of VND29,300 per share, implying an expected return of +22% (based on the closing price on July 4th 2025). We recommend a BUY rating for MBB.