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MBB Equity Report_Buy_Well Balancing Between Risk and Profitability

20/09/2021

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INVESTMENT THESIS

• Sustainable growth is maintained, underpinned by the ecosystem of member companies operating in the financial sector. In the first 6 months of 2021, MBB still recorded a high credit growth of 11%ytd, which was among the strongest growth banks in 1H2021, higher than the industry-wide average of 7% while PBT grew by 50% yoy thanks to the improvements in NII and NFI.

• Accelerating digital transformation is expected to expand customer base, so as improve NIM and non-interest income. Bank’s number of customers and online transactions has increased rapidly from 2020 thanks to new app and attractive digital programs. The CASA ratio was at 38.6%, the second highest in the sector.

• Efforts in bad debts handling help to improve assets quality. NPL ratio decreased to 0.8% at the end 2Q2021 while the provision coverage ratio climbed to over 230%.

RISKS

The assets quality of parent bank and consumer finance company -Mcredit would suffer due to the 4th Covid outbreak in Vietnam. However, there is not too much of concern thanks to current low NPL ratio and strong provision buffer.

RECOMMENDATION

We evaluate MBB as one of the best banks in the sector regarding its outstanding position in terms of growth rate, asset quality as well as business prospects thanks to digitization, effective operating ecosystem, and visionary management.
GTJA (VN) recommend “BUY” MBB shares with a long-term target price (6-8 month) of 33,200VND/share, corresponding to an expected return of 17.7%.

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