1H2023 RESULT UPDATES

At the end of the first half of 2023, STB recorded outstanding business results compared to the sector average.

The bank’s outstanding loans only increased by 5%ytd, however, the bank’s interest income hiked with the sharp increase in NIM, from 3.7% at the end of Q1 to 4.2% at the end of Q2. NII increased by 121%yoy in quarter 2 and by 82%yoy in the first half of the year, reaching VND 11,588 billion.

However, non-interest income recorded a sharp decline, as a result of poor performance from both services and other activities.

During the period, the bank incurred more bad debts due to the unfavorable general market context.

The provision expense in the period dropped sharply by 35% thanks to the relief from the pressure of provisioning for VAMC debt, helping the bank’s PBT in the first half of the year increase by 63% yoy, equivalent to over 50% of the bank’s business plan in 2023.

RECOMMENDATION

The bank’s business results in the first period of 2023 improved strongly thanks to the release of earning assets and more efficient lending.

Currently, it is almost certain that STB will complete the restructuring of VAMC’s bad debt this year. We expect the bank’s business to improve strongly in the long term.

We reiterate our “Buy” recommendation on STB with the targeted price of VND40,000/share, corresponding to the expected return of 30%. (the STB initial report)