VIB - Strategic shift: Poised for transformation
We conducted a valuation for VIB stock and estimate its fair value at VND 24,100 per share, equivalent to a projected 2025F and 2026F P/B of 1.7x and 1.5x, respectively.Earnings are supported by the bank's strategic shift, expanding into corporate lending amid a slow recovery in retail credit. VIB’s new direction is expected to create opportunities to boost credit growth and expand non-interest income through the development of products and services targeting corporate clients. Meanwhile, in the medium term, we expect ample room for growth in the bank’s core business of retail lending, supported by a rebound in consumer credit demand.
Profit growth is supported by the outlook for bad debt recovery. We see strong potential for VIB’s NPL recovery in the coming period, underpinned by (1) The incorporation of asset seizure rights under Resolution 42 into the Law on Credit Institutions, approved by the National Assembly and effective from Q4/2025, which is expected to shorten asset seizure timeframes (to 3-6 months) and reduce litigation costs associated with recovering collateral from non-cooperative borrowers. (2) The continued recovery of the real estate market is expected to accelerate collateral liquidation (real estate accounts for 64% of total collateral value) and capital recovery. While recoveries from previously written-off bad debts are expected to provide VIB with a notable one-off boost to income, the recovery of on-balance-sheet NPLs will enable interest income reversals and lower credit costs, thereby improving NIM and profitability in the medium term.
Valuation. Despite a slow rebound in core retail lending activities, we believe that the full enactment of Resolution 42 into law and an improving real estate market will support asset quality enhancement and profitability metrics, thereby underpinning our 1-year forward target P/B multiple of 1.5x, equivalent to the 5-year average P/B. In addition, the ongoing search for a strategic investor, supported by a 25% remaining foreign ownership limit, offers potential re-rating opportunities for VIB shares.
Risks. Credit growth may remain constrained and asset quality could deteriorate if the economic recovery and real estate market rebound fall short of expectations, especially under the influence of global macroeconomic volatility.
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