VCB Update – BUY

We raise our 12-month target price by 16.5% to VND80,700/share, mainly driven by upward revisions to our 2026F-2027F EPS forecasts of 21% and 17%, respectively, reflecting our expectations of a higher NIM and lower credit costs. We upgrade our recommendation from OUTPERFORM to BUY. In 1H2026, VCB completed 60-63% of its PBT target and 51% of our full-year forecast. For 2026F, we forecast PBT of VND57,135 bn, +29.8% y/y. Excluding the VND3,000 bn one-off gain, 2026F PBT is projected to grow 23% y/y, well above management guidance of 5-10% y/y.

Q2/26 PBT surged, +57.9% y/y and +47.6% q/q. Excluding the more than VND3,000 bn gain from consolidating the subsidiary that owns the Vietcombank Ben Thanh tower, PBT still increased 30.7% y/y and 22.2% q/q. The strong performance was primarily driven by NIM expansion and well-controlled credit costs.

Credit growth remained modest (+12.8% y/y and +5% YTD), below the industry average (+17% y/y and +8% YTD), mainly due to weaker demand for residential mortgages and household business loans. Meanwhile, NIM expanded to 3.0% (+32bps y/y and +11bps q/q) as loan yields increased sharply (from below ~6% to ~7%), while funding costs remained under control thanks to VCB’s strong CASA (~34%) and State Treasury deposits.

NFI returned to growth. Excluding the one-off gain from the consolidation of the Vietcombank Ben Thanh tower, NFI increased 12.6% y/y and 18.3% q/q. However, the improvement was mainly driven by FX trading income, while core income from fee and recoveries from written-off loans remained broadly flat.

Asset quality remained the best in the banking system. NPL ratio and Group 2 loan ratio stayed low at 0.61% and 0.25%, respectively, thanks to overdue loan formation remained ~0% in Q2/26. As a result, credit costs fell to only VND500 bn, -37.9% y/y and -79.8% q/q. NPL coverage ratio improved to 279%, the highest in the sector.

VCB’s earnings growth outlook has improved but given the persistently high interest rate environment, we apply a target P/E of 16x, equal to its historical median. Accordingly, our 12-month target price is VND80,700/share.