With a focus on retail banking & SME segments, OCB has expanded its customer base from 1.1 million customers at the end of 2018 to 2.9 million customers by the end of 2022. At the same time, with strong CAR fluctuating around 12%, higher than the industry average, credit growth is maintained at a high level, helping the credit market share expand from 0.7% in 2018 to 1% at the end of 2022. ROE is also anchored at around 20% on average in the 2018-21 period.
OCB's business activities slowed down in 2021-22 as the bank's main customer base are those heavily affected by the Covid-19 pandemic and the economic downturn. With a cautious view, we believe that amid the tough economic condition, some banks concentrating on SME, MSME, or individual customers with low- and middle-income levels, including OCB, may continue to face challenges given the possibility of credit growth and cross-selling of products and services. However, by aggressively narrowing the consumer credit segment in the last two years, we believe the bank's asset quality has improved. In other words, the most difficult quarters in the bank's debt settlement may be over.
Combining the DCF and PBR methods, the fair value of OCB is VND 22,600, corresponding to a PBR of 1.06 times for 2023. Difficulties are expected to ease and the bank will likely regain its growth momentum. The target price is equivalent to a BUY recommendation with an expected return of 23% compared to the closing price on July 3, 2023
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