Update VCB – OUTPERFORM

BANK FOR FOREIGN TRADE OF VIETNAM (VCB)

We raise our 12-month target price by 12.8% to VND 75,100/share, mainly driven by an upward revision of our target P/E from 16.5x to 18.0x to reflect a more favorable macro environment and the expectation that VCB will attract strong foreign inflows once Vietnam’s stock market is upgraded. Accordingly, we upgrade our recommendation from NEUTRAL to OUTPERFORM.

Q2/25 results were resilient with PBT reaching VND 11,034bn (+9.1% y/y and +1.6% q/q).

Credit growth remained relatively modest compared to sector average (+13.4% y/y and +7.3% YTD), while NIM stood at 2.67% (-42 bps y/y and flat q/q) due to lending yields falling to a historical low of 5.5%, resulting in only a mild increase in NII (+1.8% y/y and +3.5% q/q).

NFI delivered strong growth (+30.4% y/y and +3.6% q/q), with highlights from FX trading (+40.9% y/y) and off-balance-sheet debt recovery (+81.1% y/y).

Asset quality remained robust thanks to selective credit growth and prudent lending practice. NPL ratio was stable at 1.0%, while special mentioned loans declined further (-4 bps q/q) to a very low level of 0.25%.

Provision expenses stayed low (-46.5% y/y and +7.6% q/q) thanks to healthy asset quality, with the NPL coverage ratio maintained at 214%.

For 2025, we forecast VCB’s PBT to reach VND 44,677bn, up 5.8% y/y (AGM plan: 3.5%), driven by:

• NII to rise mildly by 5.5% y/y as NIM contracts 21bps y/y to 2.68%, while credit growth improves to 16.2% supported by stronger real estate supply and rising public investment.
• NFI to grow 12.8% y/y, mainly from FX trading (+16.3% y/y) and off-balance sheet debt recovery (+16.1% y/y), which are expected to remain favorable.
• OPEX to increase 15% y/y, pushing CIR higher to 36.1% from 33.6% last year.
• Provision expenses to fall sharply by 35.6% y/y thanks to a low overdue loan formation, with NPL coverage ratio at 211%.