INVESTMENT THESIS

Business result 1H2021: CTG recorded credit growth of 6%ytd. Customer deposit growth is also at a good level compared to the whole industry, +5%ytd. In the first 6 months of the year, the bank’s TOI reached VND 27,000 billion, + 30.7% yoy. Meanwhile, operating expenses rose more slowly at +16.7%yoy, causing CIR ratio to fall from 31.9% to 28.5%. The bank’s 6-month accumulated pre-tax profit reached VND 10,850 billion (ranked 3rd in the industry), up 45.4%yoy.

The post-restructuring phase of CTG will explode thanks to retail activity, through which we expect new SME and individual disbursement to lead the bank’s credit growth to 9.65% in 2021. NII improved thanks to more advantaged cost of funds; service income increased by 50%yoy and the improved CIR rate will help PBT grow by 31.74% yoy, reaching VND 22,507 billion in 2021. In addition, the resonated advantage from capital increase creates a strong capital buffer for the bank to grow strongly in the medium and long term.

RISKS

In the short term, the bank’s profits are affected by the epidemic. Supporting packages and new bad debts leading to increased provision expenses, will lower the bank’s profit.

RECOMMENDATION

CTG shares have had a sharp increase of more than 100% in the past 1 year. Currently, the P/B of the bank is relatively high compared to the peers, which are banks with the same size of equity and outstanding loan in Pacific- Asia countries. Despite this, CTG’s P/B is currently 1.74, lower than the P/B of the SOBs group and the industry-leading private commercial group such as TCB, MBB. Therefore, resonating with positive business prospects, we recommend “BUY” CTG shares with a target price of 39,200VND/share, equivalent to upside 16.1%.