BUSINESS RESULT UPDATE

Credit growth in the first 9 months of the bank was only 4%ytd, lower than the sector average growth rate and the lowest among banks.

Net interest margin continued to narrow in the context of preferential interest rate packages and higher COF compared to the previous year.

Non-interest income narrowed due to pressure on reducing service income and other income sources. The bright spot is that income from FX activities continues to increase strongly.

The bank’s NPL ratio was also not out of the sector trend, increasing to 1.21% at the end of Q3. However, provision expenses in Q3 and accumulated 9 months decreased sharply by more than 20%.

At the end of the first 3 quarters, VCB recorded a pre-tax profit of nearly 30,000 billion VND, continuing to lead the banking sector in terms of profits.

COMMENT

VCB is the most effective bank in the SOBs group with the number one position to large corporate customers in Trade finance & international settlement and foreign exchange trading activities.

Possessing a large reserve buffer and a cautious risk appetite, the impact of bad debts arising in a weak economic context on the bank’s profits has been minimized, helping to maintain profit growth momentum in the first 9 months of the year.

We value VCB shares at 93,000VND/share and recommend “Hold” in the long-term investment portfolio.