Update CTG – BUY

BANK FOR INDUSTRY AND TRADE (CTG)

We raise our 1-year target price by 0.4% to VND50,200/share as we lift our 2026F/27F PBT forecasts by 6.7%/18.8% and roll our target price to 2027F, offset by a lower target P/E of 8.0x from 9.4x due to expectation of slower earning growth in 2027F. Maintain BUY.

9M26 PBT reached VND39,557 bn (+33.9% y/y), completing 87.6% of the AGM target and 74.2% of our new 2026F forecast (VND53,303 bn, +22.7% y/y).

3Q26 PBT reached VND13,689 bn (+29.0% y/y, -7.1% q/q), the highest in the system. NII rose 27.0% y/y while opex grew only 19.3% (CIR 25.1%). However, PBT still declined q/q as provision expenses rose 46.8% to strengthen the provisioning buffer.

Credit growth lagged the industry (+2.3% q/q, +7.4% YTD vs. +11.6% for the system). Credit growth has been slow over the past 04 quarters because CTG is prioritizing NIM and asset quality over scale expansion.

NIM rose 14 bps q/q to 3.06%, the highest since 1Q24, as lending yields rose 54 bps to 8.42%. However, term deposit costs rose faster (+75 bps). Room for further NIM expansion is narrowing, especially as the SBV has directed banks to cut lending rates. We forecast NIM at 2.98%/2.90% in 2026F/27F.

NFI rose 28.4% y/y on net fee income (+56.7% y/y) and FX income (2.1x y/y). Recoveries of written-off loans fell 24.5% y/y amid an illiquid real estate market.

Asset quality remained stable. Overdue loan formation fell to 0.2%/quarter, below its historical average of 0.36%. NPL ratio was flat at 1.2% and Group 2 loans rose 14 bps to 1.08%, while NPL coverage improve from 134% to 160%, creating room to write off bad debts in 4Q26 and maintain asset quality without pressuring profit.

We forecast 2027F PBT at VND62,638 bn (+17.5% y/y), driven by 15% credit growth and credit costs falling to 1.1%. As profit growth is expected to slow in 2027F vs. 2026F, we lower our target P/E to 8.0x, implying a 1-year target price of VND50,200/share.

The market appears to be pricing in slower profit growth in 2027F, as credit growth remains sluggish and the benefit of NIM expansion has largely been reflected in 2026F. However, with P/E at only 5.8x, more than 1.5 standard deviations below historical median (9.3x), this discount looks excessive for CTG. Maintain BUY.