Analyst Pin-board VCB – Lasting revenue pressures and positive cost cuts in the first half
- VCB maintained its growth momentum in 1Q22 with moderate earnings results (15% YoY), driven by robust net interest income and net profit margin. Non-interest income was impacted by the bancassurance fee bonus, zero transaction fee package and high comparison base. Credit cost margin was a minor growth factor despite the reversals of provisions for interbank lending.
- We expect the provisioning level in the next quarter to be sustained and become the leading growth factor. NIM will be maintained from 1Q22 but still suffer from the high comparison base effect, putting tension on the net interest income growth despite the resiliency of credit expansion. Total operating income will be supported by the bancassurance segment. Earnings growth is projected to pick up strongly to 56% YoY, reaching VND 7.7 trillion.
- We maintain our positive view on the capital raising catalyst, while being neutral on the zero-dong bank deal. Given the weak sentiment towards the banking sector and the recent valuation multiple re-rating on a sector-wide basis, we revise down our target price by 14% to VND 96,900/share. This is equivalent to a BUY recommendation with an upside of 26% from the closing price of June 14th, 2022.
Joint Stock Bank for Foreign Trade of Vietnam is a commercial bank. Through its subsidiaries, Co. is engaged in banking transactions, including mobilizing short, medium and long term deposits from economic entities and individuals; providing short, medium and long term loans to various economic entities and individuals; conducting foreign exchange transactions; international financial and commercial services; discounting commercial notes, bonds and other valuable papers and other banking services. As of Dec. 31, 2012, Co. has about 400 branches/ transaction offices/ representative office/ affiliates both in Vietnam and abroad.
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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