INVESTMENT THESIS

Steady growth. In 2021, ACB recorded a credit growth of 15.7%, relatively stable compared to the 2018-2020 period. The credit components have barely changed significantly with 94% of outstanding loans belonging to SMEs and individuals. PBT grew by 25%, lower than the overall commercial bank group.

Prudent asset quality control. NPL ratio was kept at less than 1% while the loan loss coverage ratio peaked in 2021 at 208%, the highest group in the whole sector.

Prospects. In addition to the stable expanded credit structure, the expansion of fee income (banca, securities) will help ACB maintain a profit growth of 20%-25% per year on average. In addition, with the new CEO and more digitalization investment- although it is a late start compared to many other banks, but also a positive signal.

INVESTMENT RISKS

The quality of assets remains the issue that needs to be closely monitored for the bank. The Covid pandemic is not over yet, with the restructuring balance of over VND 10,000 billion still potentially risky if the infections expand.

RECOMMENDATION

Based on the expectation that ACB will continue to maintain a retail-focused business model with the current segment structure, we expect an intact credit growth rate of over 15% in the period 2022-2024 and profit increase of 25% per year. We determine the appropriate price for ACB shares at 38,300VND/share (6-18-month investment term) and recommend “Hold” with ACB.