INVESTMENT THESIS

As a State-owned bank, BIDV is the largest bank in the system. Playing role in distributing State and foreign capital gives BIDV the advantage of participating in large projects, expanding credit as well as obtaining large revenues from international payment guarantees.

Shifting loan book to individual customers might expand profitability well. Service margin has not been optimized and there are many factors that can be improved such as banca cooperation, boosting fees income.

Cooperation with Keb Hana Bank has not yet made a mark but can make breakthroughs in the medium to long term.

State divestment and capital increases and private placement plan are catalysts for the bank stocks. In addition, BIDV and the state-owned banking group have already received a capital raising mechanism, making it easier for bank to implement capital increasing plans for business expansion.

RISKS

There is still large bad debt burden. Moreover, BIDV has the largest restructuring loan in the system at around VND25,000 billion. make provision expenses still high which results in profit erosion. However, the quality of the bank’s assets has improved significantly, as shown in the NPL ratio.

RECOMMENDATIONS

We expect BIDV to achieve a credit growth rate of 15% in 2022, NIM sideways. Meanwhile, large provision expenses and expanded operating costs are factors that erode profits. However, PBT might still grow by 40% in 2022. The brand awareness and its position make the P/B 2.74 valuation not too high for the state-owned bank like BIDV. We determine the reasonable price of BID at 55,000VND/share and recommend “Buy” BID with the 1-year expected return of 17% from the closing price of February 23, 2022.