Update VIB – Outperform

We maintain our target price of VND 20,200 per share to end-2026, based on a target P/E of 8x and P/B of 1.3x. However, as VIB’s share price has declined 5.4% since our previous report, we upgrade to OUTPERFORM, from NEUTRAL.
3Q25 results remained subdued, with PBT of VND 2,030 billion (+1.6% y/y and -21.8% q/q). The weak performance was mainly due to a surge in provisioning expenses (+0.2% y/y on a high base and +82.2% q/q) as the bank sought to strengthen its thin provisioning buffer.
Credit grew steadily (+4.7% q/q, +15% ytd, and +25% y/y), driven mainly by lending to real estate and securities corporates. The proportion of retail loans continued to decline to 71.6%, down from nearly 90% three years ago. NIM was flat q/q at 3.27%, although still 75 bps lower y/y, as improved lending yields offset higher funding costs. NII edged up 0.3% y/y and 5.1% q/q.
NFI recovered (+7.4% y/y), with notable contributions from off-balance-sheet debt recoveries (+70.7% y/y) and fee income (+59.4% y/y).
VIB is shifting toward large-corporate lending, which carries lower non-performing loan (NPL) risk than retail loans, amid a still-muted consumer recovery. As a result, asset quality improved, though it remains relatively weak. NPL ratio declined 17 bps q/q to 2.74%, while special mentioned loan ratio fell 24 bps q/q to 3.32%. Interest collection days stayed healthy at 28 days. Despite the improvement in asset quality, VIB increased provisioning expenses to VND 1,158 billion (+82.2% q/q) to bolster its buffers. NPL coverage ratio rose 2.2 ppts q/q to 39.4%, still low in the industry.
For 9M2025, VIB completed 64% of its full-year plan and 70% of our previous forecast. For FY2025, we cut our PBT forecast by 7.2% to VND 9,335 billion, +3.7% y/y (AGM plan: +22.4%), mainly due to higher than expected credit costs. For FY2026, we forecast PBT of VND 10,880 billion, up 16.5% y/y, driven by solid credit growth of 20% and a 9 bps improvement in NIM.
With improving asset quality and the return of double-digit earnings growth in 2026, we apply a target P/E of 8x for VIB, higher than historical median of comparable banks of 6.5x.