Update BID – BUY

We raise our target price by 4.8% to VND 46,100/share by end-2026, based on target multiples of 12.6x P/E and 1.5x P/B, and upgrade our recommendation from OUTPERFORM to BUY, as the share price has corrected 14% from its recent peak. Earnings are expected to improve clearer in 2026 thanks to a mild NIM recovery from the low 2% level.
Q3/25 results have yet to show a clear turnaround. PBT rose 16.9% y/y off a low base but fell 12% q/q. Credit growth remained slow at 8.8% ytd, well below the sector’s 13.4%. NIM declined 22 bps y/y and 6 bps q/q to 2.09%, as lending rates stayed compressed at around 6.2%. As a result, NII increased only 8.5% y/y and 1.2% q/q.
Non-interest income rose 83% y/y, supported by continued positive off-balance sheet NPL recoveries (+41.9% y/y), while fee income maintained a solid growth (+17.5% y/y).
Asset quality remained stable, though risks still linger. NPL ratio and special mentioned loan ratio held steady from prior quarters at 1.87% and 1.5%, respectively. NPL coverage ratio improved slightly to 95%. However, interest collection days remained elevated at 57 days, having surged during 2023–24, indicating that potential deterioration risks have not fully abated.
For 2025, we forecast PBT of VND 33,396bn (+6.4% y/y), in line with management’s 6–10% guidance. For 2026, we project 10% growth of PBT to VND 36,707bn, driven by:
(1) Credit growth is expected at 15.7% and NIM increase 10 bps to 2.21%, lifting NII growth to 19% y/y. BID’s lending rate is already very low (~6.2%) and may edge up as retail lending recovers, while deposits from the State Treasury help stabilize funding costs.
(2) Operating expenses are expected to rise 10% after staying almost flat in 2025. The CIR (excluding bonus and welfare funds) is projected to fall from 33–34% to 32%, supporting profit growth.
(3) Provision expenses are expected to increase 29.8% y/y to rebuild provision buffers – which are no longer thick. NPL coverage ratio is projected to reach 98% by end-2026.

Impact of private placement
As per the 2023 AGM resolution, BID plans to privately issue 9% of its shares to strategic investors. In Q1/25, BID completed the first tranche, issuing 124 million shares (1.8%) at VND 38,800 per share, equivalent to 2.0x BVPS as of Q3/24.
For the remaining ~7.2%, BID will continue seeking potential domestic and foreign investors, with issuance depending on market conditions and business outlook. Based on previous placements, we estimate future issuance prices will also be around 2.0x BVPS at that time.
Capital raising is particularly important for BID, as its CAR stood at just 9.4% at end-Q3/25 – close to the 8% minimum and well below the sector average of 12%. A capital increase will help reduce funding costs, support credit expansion, and prepare for tighter capital requirements under Circular 14/2025 (Basel III) in 2026-2030.
However, with a larger equity capital base, BID will face pressure on ROE at a time when earnings growth is slowing. We estimate ROE will decline from around 17% during 2022–24 to about 15% in 2025, roughly matching the sector average.