VCB - Short-term headwinds are outweighed by strengthened buffer
We maintain a positive view and rank VCB among our top choices in this uncertain time. Healthy lending, resilient buffers, competitive funding costs, reputable brand, diversified customer base, leading position in trade financing, international settlements and foreign exchange are robust rationales. In the medium term, bad debt recovery and low growth of provision expenses are expected to be new earnings drivers. In the longer term, we evaluate its significant valuation premium on the sector multiples justifiable, although it could be slightly lower than historically due to lower sustainable ROE due to lower leverage and enhanced ROA.
With an estimated recovery in growth, prudent provision policy resulting in potential earnings surprises, despite rising pressure in several segments, we value VCB at VND117,000. Coupled with no cash dividend, this translates into an upside of 23% from the closing price on 10 March 2021. We thereby have a BUY recommendation on the stock.
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.
RongViet Research reports are diversified and abundant, along with in-depth analysis and performed by experienced, highly-qualified and knowledgeable teams. With the objectives of transparency, accurate and timely manner, RongViet believes that our products would always be important sources of information for customers/investors’ investment decisions.”
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.