SUMMARY

– Maintain “Outperform” rating for the sector.

– Based on 1st quarter results and epidemic control capacity in Vietnam as well as support policies from the SBV (interest rate reduction, TT03/2021), we believe that most banks will achieve their business target for 2021.

– Some banks picked for outstanding 2021 performance: VPB with cash flow from selling FE Credit, CTG recovering from the restructuring period, VCB no longer has provision expenses pressure.

– Along with positive business results, capital raising activities and the search for strategic partners (LPB, OCB, SHB, VCB, TPB, VPB) or signing exclusive insurance cooperation contracts (HDB, LPB), will be one of the positive driving forces driving the momentum of banking stocks in the period of 2021-2022.

– P/E, P/B of sector are still attractive when they are respectively 30% and 16% lower than VNINDEX. Compared to the emerging markets and ASEAN peers, the current higher price of banking stocks is fully in line with the attractive profitability and potential of Vietnam’s banking industry in a more favorable macro condition.