MBB Update – OUTPERFORM

MILITARY COMMERCIAL JS BANK (MBB)

We lower our 1-year target price by 3.6% to VND27,000/share, due to (1) reducing our target P/E from 8.0x to 6.5x – in line with the historical median to reflect the high interest rate environment, and (2) rolling forward the valuation date to mid-2027F. We maintain our OUTPERFORM recommendation. In 1H2026, the bank achieved 49-51% of its PBT target (15-20% y/y growth) and 48% of our forecast. For FY2026F, we forecast PBT at VND42,407 bn, up 23.7% y/y.

Positive Q2/26 PBT (+40.7% y/y and +9.7% q/q), driven by strong credit growth, while operating expenses and provision expenses remained under control.

Credit growth maintained strong (+37.8% y/y and +13.2% ytd), outperforming the industry (+17% y/y and +8% ytd), with real estate & construction corporate lending growing rapidly (+76.6% y/y), concentrated in residential real estate in HCMC and Hanoi and industrial real estate. However, real estate sector risks remain under control, with an NPL ratio of ~0% and a relatively modest exposure (17.1%).

NIM recovered by 36 bps q/q to 4.23%, back to the same level as the year-ago period, as high lending rates began to be reflected more strongly in interest-earning asset yields.

NFI remained challenging (-27.3% y/y and +40.7% q/q), in line with the industry trend, with weaker performance across services, FX, securities and off-balance-sheet debt recovery, due to declining liquidity in the stock and real estate markets.

TOI grew moderately (+18.5% y/y and +17.2% q/q), but with operating expenses growing at a slower pace (+13.5% y/y), CIR continued to decline, reaching only 27.5%, thereby supporting strong profit growth.

Asset quality remained stable. Overdue loan formation ratio remained at 0.37%/quarter, below the historical average of 0.5%/quarter. NPL and Group 2 loan ratios were broadly flat at 1.4% and 1.0%, respectively. Accordingly, credit costs were under control at 0.36%/quarter, while NPL coverage remained stable at ~94%.

Despite the high interest rate environment, MBB’s positive earnings growth outlook provides a basis for us to apply a target P/E of 6.5x – in line with the historical median. Accordingly, our 1-year target price is 27,000 /share.