Update VCB – Outperform

We cut our target price by 7.7% to VND 69,300/share by end-2026, mainly due to lowering target P/E from 18x to 16.5x to reflect a slower profit growth outlook of 6.1% in 2026, which largely offsets the positive impact from expected foreign inflows following stock market’s upgrade. However, we maintain OUTPERFORM rating as the share price has declined 9.3% since our previous report.

3Q25 business results showed a modest growth, with PBT of VND 11,239 billion (+5% y/y and +1.9% q/q). TOI increased marginally (+3.5% y/y and +1% q/q), while operating expenses and credit costs remained stable.

Credit growth stayed cautious (+4.7% q/q, +12.4% year-to-date and +16.1% y/y), with growth coming from all customer segments, reflecting VCB’s prudent lending stance. NIM continued to contract but at a slower pace (-7 bps q/q and -29 bps y/y). As a result, NII rose 8% y/y and 3.5% q/q.

NFI remained lacklustre (+4.2% y/y and -8.4% q/q). While fee income recovered       (-26.2% y/y due to upfront banca fee recognition and +9% q/q), FX trading weakened (-5% y/y and -21.8% q/q), and off-balance-sheet debt recovery slowed (+18.1% y/y and -26.4% q/q).

Asset quality were still best-in-class. NPL ratio and special mentioned loans were flat at 1.03% and 0.27%, respectively – the lowest in the sector – supported by selective credit disbursement policy. Credit cost was therefore kept low at 0.05%, mainly from general provisions.

In 9M2025, VCB completed 75.8% of its plan and 74.2% of our forecast. For full-year 2025, we forecast PBT of VND 44,699 billion, up 5.8% y/y (AGM guidance: +3.5%).

For 2026, we forecast PBT of VND 47,433 billion, up 6.1% y/y. Although TOI is expected to grow stronger (+16.2% y/y) on a 10 bps NIM improvement, we expect a sharp increase in provisioning expenses (+241% y/y) to maintain a provisioning buffer above 200%. Given the lacklustre near-term earnings growth outlook, we lower our target P/E from 18x to 16.5x, in line with the historical median.