Update STB – Outperform

We raise our target price by 12% to VND 57,000/share but downgrade our recommendation from BUY to OUTPERFORM as the stock price has increased by 27% since the previous report. Our target price is based on target multiples of 7.5x P/E and 1.1x P/B, plus the potential gains from recovering the loan secured by 32.1% of STB shares.
PBT in Q3/25 was flat q/q at VND 3,657bn, up 33% y/y. STB fully recovered the Phong Phu Industrial Park loan but also booked more than VND 4,000bn in specific provisions, keeping earnings unchanged q/q.
Credit growth was moderate (+3.1% q/q, +12.4% ytd, +15.3% y/y), below the sector’s ytd growth of 13.4%. NIM improved (+46 bps q/q, +19 bps y/y) to 4%, mainly thanks to off-balance sheet interest reversal from the Phong Phu IP loan. Therefore, NIM is expected to return to around 3.5% in coming quarters as these reversals fade.
NFI was slow in Q3/25 due to weaker fee income (-10.9% y/y) and FX trading (-11% y/y).
Asset quality deteriorated unexpectedly in Q3/25. NPL ratio rose 29 bps q/q to 2.75%. More notably, special mentioned loan ratio surged 91 bps q/q to 1.64%. This mainly stemmed from exporters affected by US tariff of steel, iron and related sub-sectors, while the bank moved to resolve weak loans rather than continuing restructurings.
In Q4/25, provisioning pressure will likely remain high as the Bamboo Airways loan (over VND 3,000bn) is classified as Group 4. However, with collateral being high-value real estate and other banks showing interest in taking STB’s place in restructuring Bamboo Airways, the bank believes recovery prospects of this loan are relatively high.
For full-year 2025, we forecast PBT of VND 13,627bn (+7.1% y/y), achieving only 93% of plan due to provisions related to Bamboo Airways. For 2026, we expect PBT to grow 15.8% y/y to VND 15,786bn, driven mainly by 16% credit growth and better OPEX control.

Large profit potential comes from recovery of the loan secured by 32.1% of STB shares
To date, there has been no update on the auction of 32.1% of STB shares (equivalent to 604.94mn shares) to recover debt. This delay likely means STB’s restructuring plan cannot be completed on schedule (end-2025) and may extend into the following year. Even so, the bank expects to be approved by mid-2026.
If the auction is approved, the starting price will likely be set no lower than the market price at the time, while the winning price will depend on actual bidder demand.
As of end-2024, the outstanding principal and interest of this loan total VND 20,061bn, excluding interest and penalty interest of other loans amounting to VND 57,605bn. However, with nearly VND 30,000bn of cumulative provisions booked (excluding reversals from the Phong Phu loan) under the restructuring plan during 2016–Q3/25, STB will need to recover at least VND 30,000bn to fully settle related obligations of debtors.
Based on recent banking M&A valuations in Vietnam, typically 1.6–3.1x post-money BVPS, we expect bidders would likely accept valuation from 1.6x post-money BVPS upward. This implies a winning price of around VND 73,000/share and deal value of roughly VND 44,000bn, exceeding the amount STB is assumed to recover. Accordingly, we assess full recovery of the loan and provisioned interest as fully achievable. The recovery gain is expected to lift BVPS by VND 12,374/share.

We estimate the target price as of end-2026 at VND 44,612/share in the scenario without these recoveries, implying target multiples of 7.5x P/E and 1.1x P/B. In the recovery scenario, reversal gains add VND 12,374/share to BVPS, raising the target price to VND 57,000/share.