Update STB – Outperform

SAIGON TREASURE BANK (STB)

We recommend OUTPERFORM with a 1-year target price of VND77,500/share, based on a size-based peer comparison (regression of market cap on outstanding credit) with comparable banks. 9M26 PBT reached VND5,893 bn (‑46.4% y/y), completing 73% of the AGM target and 72% of our forecast. We forecast 2026F PBT at VND8,187 bn (+7.3% y/y) and 2027F PBT at VND8,832 bn (+7.9% y/y).

3Q26 results were weak. PBT came in at VND1,757 bn (‑51.9% y/y, ‑13.4% q/q) as NII fell 33.6% y/y and provision expenses rose 5.5x y/y, partly offset by a surge in fee income and a sharp drop in operating expenses.

Credit growth accelerated to 10.1% q/q in 3Q26 (+11.8% YTD, +15.6% y/y). Since signing a comprehensive strategic cooperation agreement with Vingroup on April 24, 2026, STB’s credit growth has picked up significantly. However, loan growth has not yet translated into a commensurate increase in interest income. Meanwhile, CASA rose sharply by 2.5 ppts to 19.3%, suggesting that the disbursed credits have not been fully circulated into business activities.

NIM fell 75 bps q/q to 2.33%, as STB’s deposit rates were among the highest, that drove customer deposits up 19.7% q/q, while excess liquidity was placed in the low-yield interbank market (net VND127,000 bn). As STB cut deposit rates by 0.5% from 20 October and new loans are expected to start generating more significant interest income, we forecast NIM at 2.45%/2.55% in 2026F/27F (‑94 bps/+10 bps y/y).

NFI surged to VND4,255 bn (6.3x y/y, +32.9% q/q), accounting for 49% of TOI. We expect fee income to remain supportive in the coming quarters, albeit at a smaller scale.

Sharp cost cuts. Opex fell 31.2% y/y thanks to headcount reduction (staff ‑25.4% YTD), bringing CIR down to 27.4%.

NPLs remained high. Overdue loan formation stayed high (2.97%/quarter), mainly from loans originated in earlier periods. STB used VND15,575 bn of provisions to resolve bad debts, cutting the NPL ratio by 21 bps to 7.33%, but NPL coverage plunged to 35% (2Q26: 57%).

We forecast 2026F PBT at VND8,187 bn (+7.3% y/y), in line with the AGM target, and 2027F PBT at VND8,832 bn (+7.9% y/y), as credit costs stay elevated at 2.2% and fee income falls 35% from a high 2026 base, largely offsetting a 14.6% rise in NII as NIM recovers to 2.55%. Our target price of VND77,500/share is based on a regression of market cap on credit size.

Valuation

EPS and BVPS are currently not appropriate valuation metrics for STB, as the bank’s total overdue loans of up to VND69,000 bn are weighing on provisions and profit, while STB also has potential profit of more than VND91,000 bn from debt recoveries, off-balance sheet interest and provision write-backs.

Therefore, we value STB using a linear regression of market cap on outstanding credit across 11 listed private banks comparable to STB, namely MBB, VPB, TCB, ACB, HDB, LPB, VIB, SSB, MSB, OCB and EIB.

Market cap and credit size are very closely correlated (correlation coefficient of 0.94, R² = 0.88), credit size explains about 88% of the variation in market cap across banks.

Applying the regression to STB’s 1-year forward credit forecast (VND808,288 bn, +14% from end-3Q26) yields a fair market cap of VND146,108 bn, equivalent to a 1-year target price of VND77,500/share. At its current credit size, STB’s market cap (VND130,457 bn) sits almost on the regression line, so upside mainly comes from credit growth. We recommend OUTPERFORM.

Our target price does not yet include potential catalysts from the auction of the 32.1% STB stake or the recovery of Bamboo Airways debts.