Banking Sector

Strong EPS outlook underpinned by accelerating credit growth

February 2025

Nam Hoang
Head of Research
[Link]@[Link]
+8428 3914 3588 ext.123

Ngoc Huynh Quan Vu Nga Ho

Manager Deputy Manager Analyst
[Link]@[Link] [Link]@[Link] [Link]@[Link]
+8428 3914 3588 ext.138 +8428 3914 3588 ext.364 +8428 3914 3588 ext.516
Contents

1 Banking overview

2 Sector recap and outlook

3 Share prices performance and top picks

4 Other topics

Corporate Bond Market

Consumer Finance

Bancassurance

Capital raising plan

2
Banking Overview
 Snapshot of Vietnamese banking sector 1

Market share of loans and deposits by type of credit

Credit institutions in Vietnam (FY2024) institutions (FY 2023)

100%
Credit institutions
90%
80%
44% 46%
Non-bank Micro-finance Foreign bank Fully- Representative 70%
credit institutions branches licensed offices of
banks foreign banks 60%
institutions
(4) (52) (47) (64) 50%
(26)
40%
Commercial Policy Cooperative 30%
Finance banks(44) banks(2) banks (1) 53% 53%
companies 20%
(16) State-owned commercial banks 10%
(SOCBs*) (4) 0%
Leasing
companies (10) Private commercial banks Total Credit Deposits
(PCBs**)(31)
Vietnam banks for social policies

100% foreign-owned banks(9) SOCBs

Others credit insitutions

• The State Bank of Vietnam (SBV) classifies Vietnam’s credit institutions into five main types: non-bank credit institutions, micro-
finance institutions, foreign bank branches, representative offices of foreign banks, and fully-licensed deposit taking banks.
• Of these, bank-related categories account for 85% by number of registrations.
• The four biggest State-owned commercial banks (SOCBs) occupy around 44%-45% of the market’s deposits and loans.

Source: SBV, Vietcap. (*) SOCBs include CTG, VCB, BID, Agribank, (**) JSCBs above are joint-stock commercial banks not
included in the SOCB list; numbers in brackets represent the number of constituents. 4
Snapshot of Vietnamese banking sector 2

Breakdown of gross loans by customer groups for banks

under our coverage Aggregate NIM of banks in our coverage universe
100%
7% 7% 5% 4% 4% 4% 4.7%
15% 13% 10% 8%
90% 21% 21% 20% 4.5%
80% 4.3%
4.1%
46% 49% 50%
70%
50% 49% 48% 3.9%
53% 53% 3.7%
60% 54%
53% 3.5%
55%
50% 57% 56% 3.3%
40% 3.1%
2.9%
30% 2.7%
50% 47% 46%
20% 43% 44% 46% 2.5%
37% 40%
30% 33% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
10% 21% 22% 25%

0% Weighted NIM of coverage

Weighted NIM of SOE banks

Weighted NIM of private banks

Retail loans SME + Corporates SOEs

• Since 2012, banks in our coverage have shifted the structure of their loan portfolios to the retail lending segment, which is
evidenced by their retail lending portions rising from 21% in 2012 to 50% in 2022. However, the contribution of retail loans
decreased moderately in the last two years due to slowed retail credit demand amid the credit downturn.
• The shift to retail lending with higher yields partly explains the improvement in NIM during 2015-2022. The aggregate NIM of
banks in our coverage universe expanded by 83 bps from 2013 to 2022. However, NIM was under pressure in 2023-2024 due to
(1) asset quality deterioration, (2) a lower retail loan contribution, and (3) increasing loan pricing competition.

Source: Company data, Vietcap estimate 5

Snapshot of Vietnamese banking sector 3

Vietnam system-wide NPL ratio

6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q2 2024 2024

System-wide NPL ratio System-wide NPL ratio excluding weak banks*

• The systemwide NPL ratio spiked in 2023, primarily driven by Saigon Commercial Bank (SCB), the fifth-largest bank by assets at
the time, which was implicated in major banking fraud involving its Chairwoman in late 2022.
• The banking sector faced continued asset quality pressure in 2023-2024 due to high interest rates in H1 2023, the real estate
and corporate bond market crackdown, and unfavorable economic conditions. However, asset quality began improving in H2
2024, a trend we expect to persist into 2025 and beyond.

Source: The State Bank of Vietnam (SBV); Vietnam Financial Times; Vietcap compilation. *Weak banks include Vikki (formerly
known as Dong A Bank; supported by HDB), VCBNeo (formerly known as CBBank; supported by VCB), MBV Bank (formerly 6
known as Ocean Bank; supported by MBB), GPBank (supported by VPB), and SCB.
Snapshot of Vietnamese banking sector 4

Constituents of TOI of banks in our coverage universe Constituents of NOII of banks in our coverage universe

100% 100%
90% 14% 90%
23% 22% 20% 21% 23% 25% 26% 26% 24% 23% 23% 22% 23% 23% 20% 24%
31% 31% 31%
80% 80% 29% 26% 30% 30% 34%
39%
70%
70%
60%
60%
50%
50% 40%
40% 86% 30%
77% 78% 80% 79% 77% 75% 74% 74% 76% 77% 77% 78% 57%
50% 51% 51% 51% 44%
30% 20% 40% 40% 47% 47% 44% 44% 47%
10%
20%
0%
10%
0%

Pure NFI Trading FX

Trading & Investment securities Net other income

NII/TOI NOII/TOI
Equity investment

• Profits of Vietnamese banks mainly come from lending activities. However, income from non-credit services has increased its
overall contribution since 2017, which we believe is partly due to the success of the bancassurance segment that started in
2017.
• The main contribution to Vietnamese banks’ NOII has been pure NFI, and this contribution has increased over the years.
Additionally, the portion of net other income in NOII has edged down in the last four years compared to the average of 32.5% in
the period from 2014 to 2017, as this latter period encompassed high recovery income from written-off debt during the
aftermath of the credit cycle downturn between 2012 to 2014.

Source: Company data, Vietcap 7

Snapshot of Vietnamese banking sector 5

ROA of banks, 2012 – 9M 2024 ROE of banks, 2012 – 9M 2024

25%
2.0%

1.8%

1.6% 20%

1.4%

1.2% 15%

1.0%

0.8% 10%

0.6%

0.4% 5%

0.2%

0.0% 0%
2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 9M 2012 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 9M
2024 2024

SOCBs JSCBs SOCBs JSCBs

• ROEs of SOCBs and JSCBs gradually increased in 2012-2022 due to their ability to improve NIM and their improvement in fee
income from a low base.
• ROAs of SOCBs were stagnant vs an increasing trend for JSCBs, which we believe was partly due to relatively lower risk
exposure in the balance sheets of SOCBs.

Source: SBV, Vietcap 8

Snapshot of Vietnamese banking sector 6

Capital structure of Vietnam’s economy Comparison of Vietnam’s banks with other Asian countries

100.0% Average 5Y 2025F P/B 2025F ROE Current Tier 1

8.7% 9.1% 5.1% 5.2% 4.4% 4.9% trailing P/B (%) capital (%)
14.5% 16.0% 16.2% 16.9% Vietnam 1.45 1.16 18.5 11.7
80.0% 19.4% 17.3%
14.3% SOE bank 2.14 1.72 17.8 9.9
17.2% 18.4% 15.9%
15.8% 18.7% Private bank 1.40 1.11 19.7 12.5
60.0% 8.0%
8.8% 10.0%
23.5%
12.3% Median of 1.13 1.28 13.9 16.3
15.1%
Asian banks
40.0%
Thailand 0.65 0.65 8.8 17.8

49.4% 48.6% 53.5%

Malaysia 1.18 1.16 10.8 15.1
20.0% 40.7% 37.6% 39.5%
Indonesia 3.50 2.55 19.4 26.8
0.0%
Philippine 1.08 1.09 13.9 16.1
2019 2020 2021 2022 2023 6M 2024
Private Equity FDI Singapore 1.07 1.40 13.9 16.5
Public Investment Corporate bonds
Public Equity Credit (bank and foreign debts) India 2.58 2.57 15.9 15.4

Source: BID, Vietcap Source: Bloomberg, Vietcap. Note: For Vietnam, the sample includes 12
banks under our coverage. For other countries, we selected the top 5 banks
in terms of assets.

9
Sector Recap and Outlook
Summary

• We forecast 2025F system-wide credit growth of 15.4%, driven by strong economic growth momentum, a persisting low-
interest rate environment, and system-wide deposit growth of 14.1% in 2025, aligning with expected credit growth. We
anticipate continued strong credit demand from corporate sectors, while expecting retail lending, including mortgages,
to continue recovering.

• We forecast aggregate NIM for banks under our coverage at 3.42% in 2025F (-3 bps YoY) due to upward pressure on
funding costs amid rising deposit rates and ongoing stiff lending rates competition. However, we believe the IEA yield
improvement should help to support NIM, driven by (1) a stronger retail credit demand vs 2024, (2) reduced support
packages for customers as the economy recovers, and (3) improving asset quality and debt collection activities.

• We expect improvement in asset quality in 2025F and forecast an aggregate NPL ratio grossed up for write-offs plus Group
2 loans of 2.47% (-11 bps YoY). We forecast for banks under our coverage to strengthen their provisioning buffers in 2025.

• For 2025, we forecast an 18% YoY increase in aggregate NPAT (14% YoY excluding STB’s one-off income), primarily
supported by strong TOI growth amid strong credit growth and further CIR optimization.

• Our coverage universe is trading at a 0.5 standard deviation below its seven-year average trailing P/B and we believe
valuations are attractive.

• Our top picks for 2025 are VCB, MBB, TCB, VPB, and STB. We believe VCB, MBB, and TCB are banks possessing sustainable
competitive advantages in terms of funding cost and can pursue a broad set of growth opportunities given their large
operating scale. Additionally, STB and VPB are projected to improve their profitability significantly over the next 2-3 years.
These stocks offer some of the highest projected returns based on our end-2025 target prices as of February 21.

11
Key data and summary valuations

Banking sector: Key data

Market State For. For. ADTV Share Target Target Div.
TSR
Code Rating Cap USD O’ship Limit Avail 30D Price VND Price VND price Upside % Yield
%
mn % % USD mn USD mn ps ps updated %
VCB BUY 20,390 74.8% 30.0% 1,145 5 93,100 114,500 02/24/25 23.0% 0.0% 23.0%
CTG BUY 8,733 64.5% 30.0% 267 12 41,500 50,000 02/24/25 20.9% 0.0% 20.9%
BID BUY 11,054 81.0% 30.0% 431 6 40,900 47,300 12/02/24 15.7% 0.0% 15.7%
VPB BUY 6,047 0.0% 30.0% 297 13 19,450 25,000 12/02/24 28.5% 5.1% 33.7%
ACB BUY 4,586 0.0% 30.0% 0 7 26,200 33,400 12/02/24 27.5% 3.8% 31.3%
TPB BUY 1,760 0.0% 30.0% 0 8 17,000 22,200 12/02/24 30.6% 0.0% 30.6%
STB BUY 2,870 0.0% 30.0% 208 14 38,850 50,000 02/20/25 28.7% 0.0% 28.7%
TCB BUY 7,336 0.0% 22.5% 0 18 26,500 32,500 02/20/25 22.6% 2.8% 25.5%
MBB BUY 5,476 9.4% 23.2% 0 11 22,900 28,000 02/20/25 22.3% 2.2% 24.5%
HDB BUY 3,157 0.0% 17.5% 0 12 23,050 25,000 12/02/24 8.5% 3.5% 11.9%
VIB O-PF 2,405 0.0% 5.0% 0 6 20,600 21,000 12/02/24 1.9% 4.9% 6.8%
LPB SELL 4,261 0.0% 5.0% 175 7 36,400 20,000 12/02/24 -45.1% 0.0% -45.1%

Banking sector: Summary valuations

Share Price EPS g EPS g EPS g P/B current P/B 2025F P/B 2026F P/E TTM P/E 2025F P/E 2026F ROE Assets/equity
Code
VND ps 2024% 2025F% 2026F% x X X x x x 2025F% LQ x
VCB 93,100 2.3% 12.3% 12.8% 2.62 2.05 1.82 16.7 14.8 13.2 16.6% 10.5
CTG 41,500 27.4% 20.3% 18.2% 1.50 1.27 1.08 10.4 8.6 7.3 18.8% 15.9
BID 40,900 9.0% 15.6% 7.2% 2.03 1.69 1.51 13.8 12.0 11.2 17.3% 19.1
VPB 19,450 51.6% 15.3% 25.8% 1.09 1.04 0.94 9.4 8.2 6.8 11.3% 6.3
ACB 26,200 3.1% 25.7% 14.3% 1.40 1.17 0.98 7.1 5.7 5.0 22.8% 10.4
TPB 17,000 36.5% 25.0% 20.0% 1.19 0.97 0.81 7.4 5.9 4.9 19.0% 11.1
STB 38,850 26.7% 39.3% 26.7% 1.33 1.09 0.89 8.0 5.8 4.5 23.0% 13.6
TCB 26,500 19.1% 21.1% 21.8% 1.29 1.13 0.98 8.7 7.2 5.9 16.7% 6.6
MBB 22,900 8.5% 10.3% 18.6% 1.23 1.03 0.86 6.2 5.5 4.7 20.4% 9.6
HDB 23,050 23.2% 14.5% 13.7% 1.47 1.02 0.85 6.4 5.6 4.9 23.8% 12.3
VIB 20,600 -28.7% 16.9% 21.7% 1.47 1.31 1.14 8.6 7.4 6.1 19.0% 11.8
LPB 36,400 91.5% -15.8% 1.2% 2.15 1.87 1.59 9.3 11.1 10.9 20.2% 11.7

Source: Vietcap (Share prices as of February 21, 2025)

12
System-wide credit growth

Annual system credit growth Monthly system-wide credit growth

16% 15.1%
16% 15.4% 15.5%
15.1% 14%
15% 14.7%
14.2% 12%
14% 13.6% 13.7%
10%
13% 8%

12% 6%
4%
11%
2%
10%
0%
9% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
-2%
2021 2022 2023 2024 2025F 2026F 2027F
2020 2021 2022 2023 2024 2025
Source: SBV, Vietcap estimates. * 2025F-2027F represent implied system- Source: State Bank of Vietnam (SBV), General Statistics Office of Vietnam
wide credit growth, which is calculated based on our forecast for credit (GSO), Vietcap
growth of banks in our coverage universe minus the average difference in
the past few years of 1.4 ppts.

 We increase our forecast for 2025F system-wide credit growth to 15.4% vs 13.8% previously, driven by (1) strong momentum in
economic growth following the Government’s 2025F GDP growth target of 8% and (2) a steady low-interest rate environment.
Despite higher credit growth at the end of 2024, January 2025 saw positive credit growth of 0.19%, compared to negative
growth in January last year, signaling stronger credit demand than the previous year.
 We believe 2025F growth will be more balanced between corporate and retail customers. On the corporate side, major
infrastructure projects will be a notable driver. In addition, on the retail side, mortgage growth has started to rebound as the
real estate market continues its recovery.

13
Credit growth of banks under our coverage

Credit growth of banks under our coverage

30%

25%

20%

15%

10%

5%

0%
BID CTG VCB ACB HDB c VPB c MBB TCB STB TPB VIB LPB

2024 2025F 2026F 2027F

Source: Company data, Vietcap; (‘c’ denotes consolidated)

 In 2024, banks under our coverage reported higher credit growth for 12M 2024 compared to the industry average (17.6% vs
15.1%), with strong performances from private banks such as HDB (+27.3%), MBB (+24.7%), TCB (+21.7%), and ACB (+19.1%).
 In an environment of intensifying competition among banks, we expect large banks under our coverage to maintain strong
credit growth in 2025F, supported by their low funding costs, solid capital base, and advanced technology. Among them, TCB,
MBB, and VCB will stand out due to their cost-efficient funding structures and strong customer bases. We forecast credit
growth in 2025F at 25% for TCB, 23% for MBB, and 16% for VCB.

14
System-wide deposit growth

Annual system-wide deposit growth Deposit growth by banks

30%
14.1% 14.3%
13.2% 13.3% 25%
11.5%
20%
9.2%
8.0%
15%

10%

5%

0%
2021 2022 2023 2024F 2025F 2026F 2027F BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
c c
Source: SBV, Vietcap estimates. * 2024-2027F represent implied
systemwide deposit growth, which is calculated based on our 2024 2025F 2026F 2027F
forecast for deposit growth of banks in our coverage universe
less 2.4 ppts (the average difference in the last three years). Valuable papers of banks under our coverage

1,200 8.7% 10%

7.7% 7.6% 7.8%
 We estimate 2024F system-wide deposit growth at a 1,000
6.5% 8%
modest 11.5%, while banks increased funding via valuable 5.9% 6.0%
800
5.0% 6%
papers (+28.8% YoY) to meet rising medium-to-long-term 600
credit demand and lock in low costs amid the current low- 4%
400
interest-rate environment. 2%
200
 We forecast a stronger system-wide deposit growth in
0 0%
2025F at 14.1% aligning with expected higher credit 2017 2018 2019 2020 2021 2022 2023 2024
growth.
Valuable papers (VND tn)

Valuable papers/Total funding (RHS)

Source: Company data. Vietcap (‘c’ denotes consolidated). Note: Total 15

funding includes interbank funding, deposits, and valuable papers
CASA ratio

Aggregate CASA ratio of banks under our coverage, quarterly Aggregate CASA ratio of banks under our coverage, yearly

27%
27.4%
26.9%
25% 26.5% 26.3%
25.1%
24.8%
23% 23.7%

21%

19%

17%

15%
Q4 21 Q1 22 Q2 22Q3 22Q4 22 Q1 23 Q2 23Q3 23Q4 23 Q1 24 Q2 24Q3 24Q4 24 2021 2022 2023 2024 2025F 2026F 2027F

Source: Company data, Vietcap Source: Company data, Vietcap

 The aggregate CASA ratio for banks under our coverage remained stable YoY but increased slightly QoQ (+1.7 ppts) to 25.1% in
Q4 2024. We attribute this partly due to the higher settlement demand during the year-end season.
 We expect a modest improvement in the CASA ratio in 2025, supported by (1) a low-interest rate environment combined with
stronger economic activity, (2) stronger retail consumption, and (3) ongoing advancements in digital innovation.

16
Deposit rates

Weighted average deposit rates of SOE banks (%)

8.0 7.4
6.8
7.0
6.0 6.1
6.0 5.4 5.3 5.5
5.3
4.9 4.8 4.7
5.0 4.3
4.0 4.0
4.0 3.4
3.1 3.1 3.1
3.0
2.1
1.8
2.0
1.0
0.0
1M 3M 6M 9M 12M
Jan-20 Dec-21 Sep-22 Dec-22 Aug-23 Oct-23 Dec-23 Apr-24 Aug-24 Dec-24 Feb-25

Weighted average deposit rates of private banks (%)

10.0
8.6
8.1 8.2
8.0 7.1
6.8 6.7
5.9 5.9
6.0 5.4 5.2
4.8 5.0 4.7 4.7
4.5 4.7

3.5 3.7
4.0 3.0
3.3

2.0

0.0
1M 3M 6M 9M 12M
Jan-20 Dec-21 Sep-22 Dec-22 Aug-23 Oct-23 Dec-23 Apr-24 Aug-24 Dec-24 Feb-25

Source: Company data, Vietcap. Weighted average rates of private banks under Vietcap coverage. 17
Aggregate 2024 NIM declined YoY

Aggregate NIM, quarterly Breakdown term structure of banks under our coverage

4.2% 100%
90%
4.0% 34% 34% 33% 31% 31%
80%
70%
3.8% 12% 11%
60% 13% 12% 12%
50%
3.6%
40%
30% 57% 58%
3.4% 53% 54% 55%
20%
3.2% 10%
0%
3.0% 2020 2021 2022 2023 2024
Q4 21 Q1 22 Q2 22Q3 22Q4 22 Q1 23 Q2 23Q3 23Q4 23 Q1 24 Q2 24Q3 24Q4 24
Short-term Mid-term Long-term

Source: Company data, Vietcap Source: Company data, Vietcap. (‘c’ denotes consolidated, ‘p’ denotes
parent bank)

 Aggregate Q4 2024 NIM declined YoY to 3.5% (-6 bps QoQ, -25 bps YoY), driven by (1) a sharp drop in IEA yields compared to
COF due to Circular 06/2023, which allows banks to refinance consumer loans with more attractive lending rates, along with
the modest recovery in consumer lending and (2) an increase in funding costs due to picking up deposit rates in H2 2024
(mostly at private banks) and ramping up mid-and-long term funding. We observe a consistent NIM contraction across the
banks in our coverage except for LPB (+37 bps), VPB (+20 bps), and BID (+14 bps).

18
2025F NIM expected to slightly decline

Aggregate NIM, yearly NIM by banks, yearly

7.0%
3.94% 6.5%
3.80% 6.0%
5.5%
3.64% 5.0%
3.57% 3.58%
4.5%
3.45% 4.0%
3.42%
3.5%
3.0%
2.5%
2.0%
BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
c c

2021 2022 2023 2024 2025F 2026F 2027F 2024 2025F 2026F 2027F

Source: Company data, Vietcap Source: Company data, Vietcap

 In 2025, we anticipate (1) a high credit growth target, which will intensify lending competition among banks, and (2) rising
funding costs, driven by gradually increasing deposit rates and a higher proportion of medium-to-long-term funding. These
factors are expected to outweigh the positive effect of (3) stronger credit demand from retail borrowers and (4)
improvements in asset quality. Therefore, we forecast for a 3 bps YoY decrease in NIM in 2025F to 3.42%.
 We project aggregate NIM for SOE banks to decrease by 6 bps YoY, and for private banks to increase by 5 bps YoY in 2025F.

19
Non-interest income NOII

Quarterly aggregate NOII/TOI and NOII growth Quarterly NOII breakdown

30% 40% 30
25% 30% 25
20%
20% 20
10%
15% 15
0%
10% 10
-10%
5% -20% 5
0% -30% 0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
21 22 22 22 22 23 23 23 23 24 24 24 24 21 22 22 22 22 23 23 23 23 24 24 24 24

Quarterly NOII/TOI (%) YoY growth of NOII (%) (RHS) Aggregate NFI (VND tn) Aggregate Other NOII (VND tn)

Aggregate NOII/TOI and NOII growth, yearly NOII by banks (VND tn)

30.0% 25% 25 150%

25.0% 20% 20
100%
20.0% 15
15% 50%
15.0% 10
10%
10.0% 0%
5
5.0% 5%
0 -50%
0.0% 0% BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
2020 2021 2022 2023 2024 2025F 2026F c c

Yearly NOII/TOI (%) YoY (%) (RHS) 2024 NOII 2025F NOII

2024 NOII YoY growth (RHS) 2025F NOII YoY growth (RHS)

Source: Company data, Vietcap (‘c’ denotes consolidated) 20

Operating costs

Aggregate TOI and OPEX growth, quarterly Aggregate CIR, PPOP & OPEX, quarterly

35% 160 40%

30% 140
25% 120 35%

20% 100
30%
15% 80
10% 60 25%
5% 40
0% 20 20%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
21 22 22 22 22 23 23 23 23 24 24 24 24 21 22 22 22 22 23 23 23 23 24 24 24 24

YoY growth of TOI (%) YoY growth of OPEX (%) PPOP (VND tn) OPEX (VND tn) Aggregate CIR (RHS)

Aggregate TOI and OPEX growth, yearly Aggregate CIR, PPOP & OPEX, yearly

25% 900 38%

800 37%
20% 700 36%
600
35%
15% 500
34%
400
33%
300
10%
200 32%

100 31%
5%
0 30%
2020 2021 2022 2023 2024 2025F 2026F
2020 2021 2022 2023 2024 2025F 2026F
YoY growth of OPEX (%) YoY growth of TOI (%)
PPOP (VND tn) OPEX (VND tn) Aggregate CIR (RHS)

Source: Company data, Vietcap (‘c’ denotes consolidated) 21

Asset quality 1

Asset quality of Vietcap’s banking coverage Asset quality of banks as of Q4 2024

8.0% 250%
5.00% 170%
7.0%
150%
4.00% 200%
130% 6.0%

3.00% 110% 5.0% 150%

90% 4.0%
2.00%
70% 100%
3.0%
1.00% 50%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2.0%
50%
21 22 22 22 22 23 23 23 23 24 24 24 24 1.0%

Aggregate cumulative write-offs/gross loans ratio 0.0% 0%

BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
Aggregate group 2 loans
c c
Aggregate NPL ratio
Group 2 loans NPL grossed up for write-off rate LLR (RHS)
Aggregate LLR (RHS)

Source: Company data, Vietcap Source: Company data, Vietcap (‘c’ denotes consolidated)

 The bad debt metrics of banks delivered encouraging signs of improvement. The Q4 2024 aggregate NPL ratio was 1.68%
(-27 bps QoQ; +5 bps YoY). The Group 2 loans ratio has decreased in three consecutive quarters to 1.71% (-9 bps QoQ; -25 bps
YoY). Additionally, the total NPLs of banks under our coverage decreased 9% QoQ.
 While most banks under our coverage witnessed QoQ declines in Q4 2024 bad debt metrics, ACB and HDB showed QoQ upticks
in the NPL ratio (2 bps and 9 bps, respectively).
 The aggregate LLR ticked up by 8.9 ppts QoQ from a low base to 108.1% in Q4 2024.

22
Asset quality 2

NPL ratio grossed up for write-offs Group 2 loans

9.0% 8.0%
8.0% 7.0%
7.0% 6.0%
6.0%
5.0%
5.0%
4.0%
4.0%
3.0%
3.0%
2.0% 2.0%
1.0% 1.0%
0.0% 0.0%
BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
c c c c

2023 2024 2025F 2026F 2023 2024 2025F 2026F

Source: Company data, Vietcap (‘c’ denotes consolidated) Source: Company data, Vietcap (‘c’ denotes consolidated)

 The aggregate Group 2 ratio among these banks has decreased QoQ for three consecutive quarters, indicating a slowdown in
NPL formation.
 We expect asset quality to improve in 2025, supported by (1) a relatively low-interest rate environment, (2) improving
economic activities, (3) stronger credit demand, and (4) continuing recovery of the real estate market. For 2025, we forecast
an aggregate NPL ratio grossed up for write-offs plus Group 2 loans of 2.47% ( -11 bps YoY). We anticipate elevated write-off
rates as banks continue to clean up their balance sheets.

23
Asset quality 3

Aggregate provision expenses (VND tn) and credit costs (%) Credit costs of banks under coverage
quarterly

35 2.00% 5.0%
30 4.0%
1.50%
25
3.0%
20
1.00%
2.0%
15
10 0.50% 1.0%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 0.0%
21 22 22 22 22 23 23 23 23 24 24 24 24 BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB
Aggregate provision expenses (VND tn) c c

Aggregate annualized credit costs (RHS) 2024 2025F 2026F 2027F

Average LLR LLR by bank

300.0% 250.0%

200.0% 200.0%

150.0%
100.0%
100.0%
0.0%
50.0%
2017
2016

2019
2012

2018

2023

Q3 2024
2013
2014
2015

2020

Q1 2024
Q2 2024
2021

Q4 2024
2022

0.0%
BID CTG VCB ACB HDB VPB MBB TCB STB TPB VIB LPB
Average LLR of coverage Average LLR of SOE banks c c
Average LLR of private banks Average LLR in 2012-2020
2024 2025F 2026F 2027F

Source: Company data, Vietcap (‘c’ denotes consolidated) 24

Net profits

NPAT quarterly (VND tn) NPAT, yearly (VND tn)

400 40%
70 60%
350 35%
60 50%
300 30%
50 40%
250 25%
40 30%
200 20%
30 20%
150 15%
20 10%
100 10%
10 0%
50 5%
0 -10%
0 0%
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
21 22 22 22 22 23 23 23 23 24 24 24 24 2021 2022 2023 2024 2025F 2026F 2027F

Aggregate NPAT YoY (%) (RHS) NPAT YoY (%) (RHS)

 Overall, 2024 NPAT growth of 19% YoY was broadly in line with our forecast, implying a resilient performance of the banking
sector despite heightening lending competition with stronger-than-expected credit growth and on-track asset quality
improvement. Q4 2024 aggregate NPAT increased 18% QoQ and 22% YoY driven by strong NII amid robust credit growth and
strong NOII due to significant improvement in recovery from written-off bad debts, FX gains, and investment income.
 For 2025, we forecast an 17% YoY increase in aggregate NPAT (14% YoY excluding STB’s one-off income), supported by (1) a
19% YoY rise in aggregate NII, driven by strong credit growth, and (2) a 10% YoY increase in aggregate NOII, led by a modest
recovery in bancassurance fees from a low base in 2024, higher recovery income from written-off bad debts as the real estate
market recovers, and income from the sale of debt related to Phong Phu Industrial Park by STB. These gains will be partially
offset by a 15% YoY increase in provision expenses given our expectation for (1) continuing loan delinquency requiring more
extensive provisions and (2) banks to further strengthening their provisioning buffers.

Source: Company data, Vietcap 25

Recent performance and top picks
Banking sector share price performance YTD

Share price performance, YTD (1) Share price performance, YTD (2)

35% 45%

40%
30%
35%
25%
30%

20% 25%

15% 20%

15%
10%
10%
5%
5%

0% 0%

Feb-25
Feb-24

Oct-24

Jan-25
Jan-24

Jun-24

Jul-24
Apr-24

Dec-24
May-24

Nov-24
Aug-24
Mar-24

Sep-24
Dec-23

Overall banking VN-Index SOE banks Private banks VN-Index

Source: Vietcap, FiinPro as of February 21, 2025 (Note: Overall banking Source: Vietcap, FiinPro as of February 21, 2025 (Note: Overall banking
represents all banking stocks under Vietcap’s coverage and is weighted represents all banking stocks under Vietcap’s coverage and is weighted
by market capitalization) by market capitalization)

27
Banks’ share price performance

Banks’ share price performance YTD

120%

100%

80%

60%

40%

20%

0%

-20%
LPB TCB HDB CTG MBB STB ACB VIB TPB VCB VNINDEX VPB BID

2025 YTD 2024

Source: Vietcap, FiinPro as of February 21, 2025

28
Trailing P/B of banks under our coverage

Average trailing P/B of banks under our coverage (Feb 2018 – Feb 2025)

2.8

2.6

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

Average trailing P/B +2 STD +1 STD 7-year average trailing P/B -1 STD -2 STD

Source: Vietcap, FiinPro as of February 21, 2025

29
Cumulative net foreign trading

Cumulative net foreign trading (Jan 2024 – Feb 2025)

50 0

0 -500

-1,000
-50
-1,500
-100
-2,000
-150
-2,500
-200
-3,000
-250
-3,500

-300 -4,000

-350 -4,500
VCB CTG BID STB HDB VPB VIB TPB LPB

Cumulative net value (USDmn) VN-INDEX cumulative net value (USD mn) (RHS)

Source: Vietcap, FiinPro as of February 21, 2025 30

Top picks – Sustainable competitive advantages - VCB, MBB,
TCB

2024 total credit (VND tn) and market share 2024 CASA ratio and funding costs

2,500 14% 5.0% 45%

4.5% 40%
12%
2,000 4.0% 35%
10% 3.5%
30%
1,500 8% 3.0%
25%
2.5%
1,000 6% 20%
2.0%
4% 15%
1.5%
500 1.0% 10%
2%
0.5% 5%
0 0% 0.0% 0%

Credit (VND tn - LHS) Market share (RHS) COF (LHS) CASA ratio (RHS)

• Pro-growth monetary and fiscal policies and a supportive regulatory environment should bode well for the banks in terms of
credit growth. However, as the SBV started to grant more generous credit quotas, the supply of credit has outweighed demand
in recent quarters, leading to price competition and NIM pressure.

• Under this macro backdrop, sector winners will be the banks possessing sustainable competitive advantages in terms of (1)
funding costs and (2) scale. First, low funding costs allow banks to offer competitive lending rates so that they can secure the
highest-quality customers while earning reasonable NIM. Second, larger banks benefit from economy of scale and can pursue a
broader set of growth opportunities while smaller banks may be limited to certain customer segments/geographies.

• VCB, MBB, and TCB fit these criteria and are well-positioned to outperform their peers over the medium-to-long term.

Source: Company data, Vietcap 31

Top picks – Profitability to rebound from a low base - STB, VPB

STB VPB
25% - Raised USD1.5bn
30% of new equity via - NIM
selling 15% stake improved
- Restructuring
25% 20% - FEC turned
FE Credit profitable
20%
15%
15%
10%
10%

5% 5%

0%
0%
2022 2023 2024 2025F 2026F 2027F
2022 2023 2024 2025F 2026F 2027F
ROE CAR ratio ROE CAR
20 60%
30,000 80%
50%
15 25,000 60%
40% 40%
20,000
10 30% 20%
15,000
20% 0%
5 10,000
10% -20%
5,000 -40%
0 0%
2022 2023 2024 2025F 2026F 2027F 0 -60%
2022 2023 2024 2025F 2026F 2026F
NPAT-MI Growth (RHS)
NPAT (VND bn) NPAT growth (RHS)

Source: Company data, Vietcap forecasts 32

Comparable peers valuation

Vietnam banks P/B (y-axis) and ROE (x-axis) (2025F)

2.3x

VCB
2.1x

1.9x
LPB

1.7x BID

1.5x
VIB

1.3x
CTG
TCB
ACB STB
1.1x

VPB MBB
0.9x HDB
TPB

0.7x

0.5x
5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Source: Vietcap, FiinPro as of February 21, 2025. Green dots indicate State-owned banks. 33
 VCB - BUY, TP of VND114,500
Rating* BUY 2024 2025F 2026F 2027F
Share Price (21 Feb) VND93,100 PPOP (VND bn) 45,551 52,670 63,532 79,080
Target Price (TP)* VND114,500 % YoY -0.7% 15.6% 20.6% 24.5%
NPAT-MI (VND bn) 33,831 38,849 46,671 57,447
% YoY 2.2% 14.8% 20.1% 23.1%
Upside to TP +23.0% EPS % YoY 2.3% 12.3% 12.8% 23.1%
Dividend Yield 0.0% NIM 2.86% 2.83% 2.91% 3.00%
TSR +23.0% CASA ratio 36.7% 37.7% 38.7% 39.7%
NPLs/gross loans 0.96% 0.92% 0.87% 0.83%
Industry Banking Credit costs 0.23% 0.24% 0.26% 0.31% Company Overview
Market Cap USD20.4n CIR 33.6% 31.9% 30.4% 28.2% Founded in 1963, VCB is the second largest bank in
Foreign Room USD1.5bn P/B 2.6x 2.1x 1.8x 1.6x our coverage universe as calculated by total assets
ADTV30D USD5.3mn P/E 16.7x 14.8x 13.2x 10.7x as of December 31, 2024, and most profitable in terms
State Ownership 74.8% ROE 18.6% 16.6% 16.2% 17.6% of total net profit. The bank had its IPO in 2008 and
Outstanding Shares 5.589 bn ROA 1.7% 1.7% 1.7% 1.8% has listed shares since June 30, 2009.
Fully Diluted Shares 5.589 bn * TP and rating last updated Feb 24, 2025

Vietcombank is the most profitable bank in Vietnam. The bank has been able to achieve and maintain the #1 position for years due to its
multiple competitive advantages, including (1) low funding costs driven by a high-quality deposit franchise, (2) superior asset quality across
customer segments with limited exposure to real estate lending, and (3) its leadership position in trade finance and international settlement.
VCB often takes the leading role in arranging financing for large-scale investment projects. As the Government pushes for more significant
investments to fuel higher economic growth, credit demand to fund large projects of national importance is rising and VCB should be well-
positioned to capture this growth opportunity. As an example, VCB, along with State-owned BID and CTG, signed a credit agreement with ACV to
provide a syndicated loan of USD1.8bn for the Long Thanh International Airport project, in which VCB will contribute USD1.0bn. In the past, VCB has
signed comprehensive strategic partnerships with several major State-owned groups such as EVN, PVN, and ACV.
The upcoming 6.5% private placement could bring about significant upside to VCB’s long-term growth outlook. We currently assume a 363.3
million share issuance to occur at end-2025 at a price of VND100,000, implying expected proceeds of VND36.3tn (USD1.4bn). Under these
assumptions, the deal could help VCB improve its capital adequacy ratio by 150 bps to the 13-14% range.
We forecast a 17% credit CAGR and a 18% EPS CAGR for VCB over the next five years (2025-2029F period). We note by participating in the
rehabilitation of a distressed credit institution, VCB may receive a higher credit quota from the SBV, which would be a potential source of upside to
our forecasts.

34
 TCB - BUY, TP of VND32,500
Rating* BUY 2024 2025F 2026F 2027F
Share Price (21 Feb) VND26,500 PPOP (VND bn) 31,621 37,681 45,531 54,799
Target Price (TP)* VND32,500 % YoY 17.9% 19.2% 20.8% 20.4%
NPAT-MI (VND bn) 21,523 26,073 31,749 38,256
% YoY 19.5% 21.1% 21.8% 20.5%
Upside to TP +22.6% EPS % YoY 19.1% 21.1% 21.8% 20.5%
Dividend Yield 2.8% NIM 4.21% 4.21% 4.25% 4.34%
TSR +25.5% CASA ratio 37.4% 37.9% 38.4% 38.9%
NPLs/gross loans 1.17% 1.12% 1.03% 0.95%
Industry Banking Credit costs 0.65% 0.60% 0.58% 0.58% Company Overview
Market Cap USD7.3bn CIR 32.7% 32.2% 30.8% 29.8% Established in 1993, Techcombank is the fifth largest
Foreign Room USD0.0bn P/B 1.3x 1.1x 1.0x 0.9x bank in our coverage universe as calculated by total
ADTV30D USD17.7mn P/E 8.7x 7.2x 5.9x 4.9x assets; The bank’s mortgages/gross loans are among
State Ownership 0.0% ROE 15.6% 16.7% 17.8% 18.6% the highest in the sector. The bank listed shares in
Outstanding Shares 7.065 bn ROA 2.4% 2.4% 2.5% 2.5% June 2018.
Fully Diluted Shares 7.065 bn * TP and rating last updated Feb 20, 2025

TCB is one of the biggest beneficiaries from the ongoing recovery of the real estate market. The bank has significant credit exposure to this
sector with 33% of its book allocated to real estate developers and 30% to mortgages. TCB possesses a unique competitive advantage in real
estate lending as its two key partners, VinGroup and Masterise, are among the leading real estate developers in Vietnam. The projects TCB
finances have clear legal documentation and most of them are residential projects primarily located in Hanoi and Ho Chi Minh City.
TCB commands one of the highest CASA ratios in the sector, which is driven by (1) its portfolio of high-income customers coming from
strategic partnerships with major corporates in Vietnam including VinGroup/Masan, and (2) the bank’s ability to constantly innovate to bring about
unique and high-value product offerings to attract customers (e.g. auto-earning). In 2024, TCB held the #1 market share in both outbound
transactions (15.4%) and inbound transactions (13.5%) through NAPAS, which indicates the bank’s superior brand equity.
Potential corporate actions over the next few years, including an IPO of TCBS and a private placement of TCB, could unlock significant
value for shareholders. TCBS is the most profitable securities broker in Vietnam with leading positions in corporate bond underwriting & advisory
and in stock brokerage. 2025 would be a favorable time for TCBS to initiate its IPO as Vietnam may get upgraded to emerging market status by FTSE
soon. Regarding a potential private placement, CEO Jens Lottner indicated in an interview with Bloomberg late last year that Techcombank was
open to selling to a 15% stake to the right strategic investor, which would likely involve a divestment by PE fund Warburg Pincus (owning a 7.9%
stake).
We forecast a 20% credit and EPS CAGR for TCB over the next five years (2025-2029F period). Our current valuation and forecasts have yet to
include the positive impact from the aforementioned potential corporate actions, which represent upside catalysts.

35
 MBB - BUY, TP of VND28,000
Rating* BUY 2024 2025F 2026F 2027F
Share Price (21 Feb) VND22,900 PPOP (VND bn) 38,406 43,140 52,181 61,132
Target Price (TP)* VND28,000 % YoY 18.6% 12.3% 21.0% 17.2%
NPAT-MI (VND bn) 22,634 25,182 29,872 34,965
% YoY 9.5% 11.3% 18.6% 17.1%
Upside to TP +22.3% EPS % YoY 8.5% 10.3% 18.6% 17.1%
Dividend Yield +2.2% NIM 4.08% 4.05% 4.18% 4.18%
TSR +24.5% CASA ratio 39.3% 38.5% 37.7% 37.2%
NPLs/gross loans 1.62% 1.64% 1.54% 1.54%
Industry Banking Credit costs 1.23% 1.14% 1.20% 1.19% Company Overview
Market Cap USD5.5bn CIR 30.7% 30.7% 30.2% 30.2% Founded in 1994, MBB is the fourth largest bank in our
Foreign Room USD0mn P/B 1.2x 1.0x 0.9x 0.7x coverage universe as calculated by total assets as of
ADTV30D USD11mn P/E 6.2x 5.5x 4.7x 4.0x December 31, 2024. The bank had its IPO in 2004 and
State Ownership 9.4% ROE 22.1% 20.4% 20.1% 19.6% has listed shares since November 2011.
Outstanding Shares 6.102 bn ROA 2.2% 2.0% 2.0% 2.0%
Fully Diluted Shares 6.102 bn * TP and rating last updated February 20, 2025

MBB has the most diversified ecosystem among our coverage. MBB has six subsidiaries, including life and non-life insurers, a consumer finance
company, a securities company, and fund & asset management companies, which we believe create cross-selling opportunities. In addition, MBB
has demonstrated success in innovating its banking apps and attracting new customers. As of 2024, MBB served around 30mn customers, which
indicates a large pool for MBB to further exploit credit services.
We believe that MBB has a solid competitive advantage in terms of (1) funding costs, with a top-tier CASA ratio, and (2) a dynamic growth
outlook from its network of subsidiaries and strategic partners. In addition, we assume MBB will receive a higher-than-average credit quota in our
explicit forecast period due to its participation in the scheme to support a weak credit institution.
We expect robust credit growth and a strong CASA contribution in 2025 to counteract the pressure of increasing deposit rates and
lending rates competition. We forecast 2025F loan growth of 25% as we expect (1) MBB to be one of the primary beneficiaries of accelerating
fiscal spending via participating in private funding to public projects given its low funding cost advantage and large operating scale to serve
different types of corporate customers and (2) a gradual improvement in micro-SME and retail credit demand.
Asset quality to be contained despite strong growth momentum. We forecast an average NPL ratio of 1.56% in 2025-2029F vs 1.48% in our
previous Update Report. We believe such strong credit growth targets by MBB indicates a potential increase in the risk profile of its lending;
however, the credit risks are still manageable. Despite forecasting credit costs to remain as high as around 1.2% in 2026-2029F, we believe strong
top line growth will help to deliver an average ROE of 19.4% in the same period. MBB is currently trading at an 11% discount to the peer median
2025F P/B at 1.2x with a 2025F ROE 20.4% vs the peer median of 18.6%, based on our forecasts.

36
 VPB - BUY, TP of VND25,000
Rating* BUY 2024 2025F 2026F 2027F
Share Price (21 Feb) VND19,450 PPOP (VND bn) 47,915 56,972 68,737 80,875
Target Price (TP)* VND25,000 % YoY 33.8% 21.0% 20.7% 17.7%
NPAT-MI (VND bn) 16,412 16,960 21,333 26,204
% YoY 64.5% 15.3% 25.8% 22.8%
Upside to TP +28.5% EPS % YoY 51.6% 15.3% 25.8% 22.8%
Dividend Yield 5.2% NIM 5.85% 6.29% 6.45% 6.49%
TSR +33.7% CASA ratio 14.1% 17.4% 18.4% 19.4%
NPLs/gross loans 4.20% 4.24% 4.04% 3.84%
Industry Banking Credit costs 4.0% 4.4% 4.2% 4.1% Company Overview
Market Cap USD6.1bn CIR 23.0% 25.0% 26.0% 26.5% Vietnam Prosperity Joint Stock Commercial Bank is a
Foreign Room USD308mn P/B 1.1x 1.0x 0.9x 0.9x Vietnam-based commercial bank with one fully-
ADTV30D USD13mn P/E 9.4x 8.2x 6.8x 9.4x owned subsidiary — asset management company
State Ownership 0% ROE 11.4% 11.3% 13.2% 14.8% VPBank AMC — and 50% ownership of consumer
Outstanding Shares 7.934 bn ROA 1.9% 1.7% 1.8% 1.9% finance company FE Credit (FEC). FEC contributed
7.934 bn around 10% to the consolidated loan book in 2024.
Fully Diluted Shares * TP and rating last updated Dec 2, 2024

VPB has the strongest capital buffer in our coverage. As of Q4 2024, VPB currently has the highest CAR in the banking industry at 15.4% after
selling capital to strategic shareholder Sumitomo Mitsui Banking Corporation (SMBC) in 2023.
VPB has been expanding its business to diversify its financial products offerings. VPB owns the largest consumer finance company (FE Credit
- FEC), a securities brokerage company (VPBankS), and OPES Insurance Company (a non-life insurer). The bank also has an exclusive
bancassurance partnership with AIA Life Insurance in Vietnam. FEC turned profitable in 2024 with better-than-expected growth. We expect FEC to
start to deliver a major earnings contribution to the group starting in 2025F, given active support from SMBC in its restructuring process.
Profit growth to be strong in 2025F-2027F, driven by (1) NIM improvement and strong credit growth, (2) a rebound in NOII and especially recovery
income from written-off bad debts, and (3) a stronger contribution from FEC. FEC recorded a bottom-line of VND500bn in 2024 (beating our
forecasts) after making losses in 2022-2023 due to resuming disbursements, improving funding costs, credits costs, and improving debt
collection. Management targets 15% credit growth in 2025 (vs 10% in 2024) and FEC’s funding costs to ease YoY.
Robust TOI to outweigh provisioning pressure: Both the parent bank and FEC witness a reduction in their bad debt metrics in Q4 2024.
Additionally, retail credit and debt collections activities have gradually rebounded in H2 2024. We believe VPB’s strong capital base, its top-tier NIM
and good synergies within the group (i.e., FEC and VPBank Securities) and its partners, will help it to cope with challenges in risk management.
Additionally, with SMBC’s support for VPB’s funding mobilization, developing new customers (i.e., FDI customers) and improving risk management,
VPB can seize good growth opportunities.
Downside risks: Lower-than-expected NIM; failure to contain credit costs.

37
 STB - BUY, TP of VND50,000
Rating* BUY 2024 2025F 2026F 2027F
PPOP (VND bn) 14,695 22,848 27,271 39,134 STB VNI
Share Price (Feb 21) VND38,850 YTD
Target Price (TP)* VND50,000 % YoY 10.6% 55.5% 19.4% 43.5%
NPAT-MI (VND bn) 10,088 14,051
1Y
17,790 25,322
% YoY 30.7% 39.3% 26.6% 42.3%
Upside to TP +28.7% EPS % YoY 28.1% 39.3% 26.6% 42.3% 3Y ann.
Dividend Yield 0.0% NIM 3.72% 3.63% 3.74% 3.81%
TSR +28.7% CASA ratio 18.3% 19.2% 20.2% 19.7% -10% 10% 30%
NPLs/gross loans 2.40% 2.00% 1.60% 1.40%
Company Overview
Industry Banking Credit costs 0.37% 0.86% 0.71% 0.92%
STB was founded in 1991, IPO’ed in 1996 and listed in
Market Cap USD2.9bn CIR 48.8% 40.2% 37.2% 31.2%
2006. As of 2022, STB was the fifth largest among our
Foreign Room USD207mn P/B 1.3x 1.1x 0.9x 0.7x coverage banks by gross loans. In October 2015, STB
ADTV30D USD14mn P/E 8.0x 5.8x 4.5x 3.2x merged with Southern Bank and the SBV took control
State Ownership 0.0% ROE 20.0% 23.0% 23.8% 27.1% of 51% of voting rights from a group of shareholders
Outstanding Shares 1.885 bn ROA 1.4% 1.7% 1.9% 2.4% deemed to have breached ownership caps.
Fully Diluted Shares 1.885 bn * TP and rating last updated February 20, 2025

STB owns one of the strongest private bank franchises in Vietnam. As of end-2023, STB possesses 552 branches and transaction offices and is
the second largest private bank in terms of brick-and-mortar networks under our coverage. The bank focuses on southern Vietnam with large
exposure to the retail and SME segments.
As STB moves closer to completing its restructuring program, we expect the bank to refocus on strengthening its core business from 2025.
Over the past eight years, STB's primary objective has been to clear legacy assets stemming from its 2015 merger with Phuong Nam Southern Bank.
This restructuring effort resulted in one of the highest employee counts and CIR ratios among private banks under our coverage. Looking ahead,
we anticipate STB will leverage technology and process automation to enhance operational efficiency and drive sustainable growth.
We believe that the substantial earnings from legacy asset sales will bolster STB's CAR ratio, enabling higher credit growth. Currently, STB
has successfully sold debts related to Phong Phu and we expect that the plans of selling a 32.5% stake pledge as collateral at VAMC will be finalized
by the SBV in 2025F. After receiving the full payment from Phong Phu in 2025F, we estimate that STB’s earnings can grow 81.4% YoY and STB’s CAR
can achieve ~11%. As a result, we expect that STB will be granted a higher credit quota and expand its lending market share.

STB is currently trading at a 2025F P/B of 1.0x compared to the peer median 2025F P/B of 1.2x with a 2025F ROE higher than the median of its
peers.

Downside risks to our positive view: Higher-than-expected NPLs; STB fails to sell large collateral assets.

38
Corporate Bond Market
New issuances increasing in 2024

Corporate bonds outstanding (VND tn) Bonds issued and redeemed, quarterly (VND tn)

1,400 14% 180

1,200 12% 160

140
1,000 10%
120
800 8%
100
600 6%
80
400 4%
60
200 2% 40

0 0% 20
2018 2019 2020 2021 2022 2023 2024
0
Corporate bonds outstanding Q1 22 Q2 22Q3 22Q4 22 Q1 23 Q2 23Q3 23Q4 23 Q1 24 Q2 24Q3 24Q4 24

Corporate bonds/ Credit balance Total value issued Total value redeemed

Source: VBMA, GSO, SBV, Vietcap estimates Source: VBMA, Vietcap compilation

 In 2024, new issuances reached VND443tn (+39% YoY), slightly higher than the total value of bonds maturing and redeemed
before maturity. As a result, the total corporate bond balance in 2024 edged up 0.6% compared to 2023.
 Bank bonds comprised 61% of total issuances and increased 57% compared to last year, as banks sought to strengthen long-
term capital for medium to long-term lending amid low interest rates. In addition, real estate bonds made up about 19% of
issuances, with major developers such as VHM contributing most of the issuances during this period.
 We expect bond issuance activity to continue improving in 2025, driven by the medium to long-term capital needs for business
expansion and the acceleration of public investment in infrastructure projects.

40
Liquidity has improved QoQ in 2024 in the C-bond market

Bonds issued by sector (VND tn) Corporate bonds traded in the secondary market
160 450,000
140 400,000
120 350,000
100 300,000
80 250,000
60 200,000
40 150,000
20 100,000
0 50,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0
22 22 22 22 23 23 23 23 24 24 24 24
Q1 24 Q2 24 Q3 24 Q4 24
Bank Real estate developer Construction Others

Source: VBMA, Vietcap compilation Source: VBMA, Vietcap compilation

 Trading value reached 31.8% of overall outstanding value in the secondary market in Q4 2024— the highest level in the past
year. We expect this positive trend to continue, driven by (1) ongoing enhancements of the HNX bond trading platform, with
more bonds being listed, (2) increased transparency from bond issuers, (3) a favorable economic growth outlook for 2025, (4)
a low-interest-rate environment, and (5) greater foreign investor participation as we expect for the Amended Securities Law
to be approved by the end of 2024, classifying foreign investors as professional investors, which will likely further boost their
participation in the C- bond market.

41
Bonds maturing in 2025 2026 will be a similar level as 2023-
2024
Corporate bonds balance coming to maturity in 2024- Monthly value of bonds with new late payment of
2025F (VND tn) coupon/principal (VND tn)
25
100
90
20
80
70
15
60
50
10
40
30
5
20
10
0
0

Apr-23

Apr-24
Aug-22

Oct-22

Jun-23

Aug-23

Aug-24
Jun-24
Dec-22

Feb-23

Oct-23

Feb-24

Oct-24
Dec-23

Dec-24
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
24 24 24 24 25 25 25 25 26 26 26 26

Source: VBMA, Vietcap Source: VIS Rating, HNX, Vietcap compilation

 Our data shows that around VND250tn of C-bonds are set to mature in 2025, comparable to the value in 2023-2024, with
nearly half of these bonds linked to the real estate sector. With the real estate market gradually recovering and homebuyer
sentiment improving, we believe the financial health of real estate companies will improve accordingly.
 Additionally, the amount of late-payment bonds was minimal in 2024, and many late-payment issuers have begun repaying
their principals to investors. As a result, we expect a reduced risk of bond defaults in 2025, with any defaults likely to present
primarily idiosyncratic risk and minimal systemic impact.

42
Banks’ exposure to C-bonds continued to decline in 2024

Corporate bonds over total credit of banks under our

Recovery rates of defaulting bonds by sector coverage
12%

Hospitality 10%

8%
Power
6%

4%
Residential Real Estate
2%

Construction 0%
BID CTG VCB ACB HDB VPB p MBB TCB STB TPB VIB LPB
p
0% 5% 10% 15% 20% 25% 30%
Q4 22 Q4 23 Q4 24
Dec-24 May-24

Source: VIS Rating, Vietcap compilation Source: Company data, Vietcap (‘c’ denotes consolidated)

 Most banks under our coverage also reported a drop in C-bonds balance as of Q4 2024 relative to Q4 2022. We note that the
C-bond balance at banks does not include bank bonds. The reduced exposure to C-bonds can be attributed to a limited
number of new, non-financial bond issuances.
 There is concern that the large volume of bonds maturing in 2025 could heighten the risk of defaults and adversely affect
banks. However, we believe the risk of bond defaults will be lower compared to 2023 and 2024, due to (i) improving financial
health of real estate developers amid the real estate market’s recovery and stronger homebuyer sentiment, (ii) sufficient time
for bond issuers to prepare, and (iii) a clearer macroeconomic growth outlook. Any defaults that may occur are likely to reflect
idiosyncratic risk with minimal spillover impact on banks. Additionally, banks within our coverage maintain strong capital
buffers to mitigate this risk.

43
Banks increased lending to real estate developers

Loans to real estate developers over gross loans by bank Credit to real estate sector (VND tn) and % credit to real
(%) estate sector over system-wide balance
40% 2,500 20%
35%
14.9% 12.9%
2,000 13.8% 13.2%
30% 12.9% 15%
25%
1,500
20% 8.1% 8.6%
6.9%
10%
6.9% 6.8%
15% 1,000
10% 5%
500
5%
0% 0 0%
BID CTG VCB* ACB HDB VPB MBB TCB STB* TPB VIB LPB* 2021 Q2 2022 2022 2023 2024
c c Business purposes Personal use

Q4 2023 Q1 2024 Q3 2024 Q4 2024 % BP/system-wide credit (RHS) % PU/system-wide credit (RHS)

Source: Company data, Vietcap; ‘c’ denotes consolidated; (*) latest data Source: SBV, Vietcap
as of Q3 2024

Selected credit exposure for banks under our coverage

Q3 2024 BID CTG* VCB MBB TCB VPB c ACB HDB c VIB TPB STB* LPB*
Mortgages/gross loans 14.0% 10.5% 18.0% ~19% 33.0% 13.6% 16.6% 7.6% 38.6% 22.0% N/A N/A
Loans to 4.0% 5.2% N/A 8.4% 33.3% 27.0% 2.0% 15.8% 1.8% 8.5% 2.8% 3.1%
developers/gross loans
Corporate bonds/total 0.3% 0.2% 0.6% 4.1% 7.5% 2.3% 0.0% 1.6% 0.2% 4.0% 0.0% 0.0%
credit balance
LLR 134% 171% 223% 92% 114% 56% 78% 68% 50% 81% 68% 83%
CAR 9.5% 9.5% 12.0% 11.4% 15.3% 15.4% 11.8% 14.1% 11.9% 14.0% 9.6% 13.4%

Source: Company data, Vietcap; (*) Data for STB is Q2 2024 data except for LLR and corporate bonds/ total credit balance, CAR for CTG as of Q2 2024.

44
Consumer Finance
Slow consumer loan growth in the last 12 months

Consumer loans in Vietnam (2020 – 9M 2024) Estimated market share (consumer finance Cos)

4,000 22.0% 50.0%

3,000 21.0% 40.0%

2,000 20.0%
30.0%
1,000 19.0%
20.0%
0 18.0%
2020 2021 2022 2023 9M 2024 10.0%

Consumer loans provided by consumer finance companies

0.0%
(VND tn)
2020 2021 2022 2023 6M 2024
Consumer loans provided by banks and other credit institutions
(VND tn) FEC (VPB's subsidiary) HDS (HDB's subsidiary)

Consumer loans over systemwide credit (RHS) MCredit (MBB's subsidiary) Home Credit

Source: SBV, Vietcap compilation Source: Company data, Vietcap estimates

 According to our estimation, as of Q2 2024, FEC remained the biggest player in Vietnam’s consumer finance sector in terms of
loans with a market share of around 29% (vs around 44% in 2020). We believe FEC will lean toward a more conservative
business model in the future after growing aggressively to gain market share in the past. Though FEC’s loan growth was only
7% in 2024, its new disbursements increased 40% YoY in the same period.
 We also estimate that MCredit may have gained the top-two position in terms of loan market share from Home Credit. MCredit
has been the only top player able to grow its loan book consistently from a low base since 2021 and 2024 loan growth was
resilient at 28% in our estimation, which we believe could be due to (1) utilizing the nationwide networks of MB Group and
Viettel Group, and (2) its strategy to focus on the card segment and partnerships with e-commerce platforms to promote
consumer loans. Additionally, HDS’s loan book grew 13% in 2024.

46
 Consumer finance NIMs to recover in 2025F

Loan growth NIMs

60.0% 35%
50.0%
30%
40.0%
30.0% 25%

20.0%
20%
10.0%
0.0% 15%

-10.0% 10%
-20.0% Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FEC HDS MCredit 20 21 21 21 21 22 22 22 22 23 23 23 23 24 24 24 24

2021 2022 2023 2024 FEC HDS MCredit

Source: Company data, Vietcap estimates Source: Company data. HDS’s NIM is reported number by HDB. FEC and
MCredit’s NIMs are our estimation from consolidated and parent bank
financial statements.

 We believe that (1) limitations in diversifying funding sources in the high-rate environment in H1 2023, (2) high NPL formation,
and (3) weak credit growth dragged on NIMs of consumer finance companies in 2023. FEC and HDS saw their NIMs slightly
improve in the last four quarters, which we attribute to (1) HDS having a more conservative lending strategy and (2) FEC
having its NIM recover from a trough due to a restructuring process. In addition, MCredit’s NIM has been decreasing from a
high base in the last two years, which could be due to the company offering more competitive loan pricing to gain market
share.
 We believe that (1) lower interest rates and (2) a recovery in the economy should help to improve credit demand and the
ability to service loans and therefore support NIM to increase in 2025F.

47
We expect consumer finance NPL ratios to decrease in 2025F

NPL ratios NPL ratios grossed up for accumulative write-offs

25% 50%

40%
20%
30%
15%
20%
10% 10%

5% 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
0% 20 20 20 20 21 21 21 21 22 22 22 22 23 23 23 23 24 24 24 24
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FEC's NPL ratio grossed up write-off rate
20 20 20 20 21 21 21 21 22 22 22 22 23 23 23 23 24 24 24 24
HDS's NPL ratio grossed up write-off rate
FEC's NPL ratio HDS's NPL ratio MCredit's NPL ratio
MCredit's NPL ratio grossed up write-off rate

Source: Company data, Vietcap estimates Source: Company data, Vietcap estimates

 From our estimation, HDS and MCredit have had their NPL ratios relatively contained at under 8% over the last two years
despite the headwinds from the economy while FEC’s NPL ratio, though at a high level, also decreased from its peak in Q1 2023.
From our observation, NPL ratio grossed up for accumulative write-offs increased at a slower pace throughout 2024 vs last
year, which indicates to us a lower NPL formation which should reduce the pressure on future bad debt metrics. Additionally,
FEC’s NPL has been decreased significantly from the peak in 2023, indicating the restructuring effectiveness.
 We expect an improvement in the NPL ratios of consumer finance companies in 2025F, driven by (1) stronger top-line growth,
(2) an enhanced credit appraisal process, and (3) improving economic activities and a YoY-lower interest rate level supporting
the repayment abilities of these companies’ customers.

48
Top consumer finance companies have good capital positions to
capture growth
ROEs CAR

60.0%
30.0%
50.0%
40.0% 25.0%

30.0%
20.0%
20.0%
10.0% 15.0%
0.0%
10.0%
-10.0%
-20.0% 5.0%
-30.0%
2016 2017 2018 2019 2020 2021 2022 2023 6M 2024 0.0%
2024 FEC HDS MCredit Home Credit

2022 2023 Q2 2024

FEC HDS MCredit Home Credit

Source: Company data, Hanoi Stock Exchange (HNX), Vietcap estimates Source: Company data, HNX, Vietcap estimates

Total debt/Equity (x)

10.0

8.0

6.0

4.0

2.0

0.0
2018 2019 2020 2021 2022 2023 6M 2024

FEC HDS MCredit Home Credit

49
 Consumer finance oers potential for high growth in the long
term
Vietnam’s labor force, Q4 2024 (mn people) Consumer loans/GDP and GDP/capita of Vietnam vs its
peers (2023)

0.8 Consumer
loans/GDP
50% China
45%
40% Malaysia
19.1 Thailand
35%
30% Vietnam

33.2 25%
20% Indonesia
15%
10%
Philippines
5%
0%
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000
Informal employment Formal employement Unemployed labor force
GDP/capita (USD)

Source: General Statistics Office of Vietnam, Vietcap Source: World Bank, CEIC data, SBV, Vietcap estimates

 According to the SBV, the CAGR of consumer loans was nearly double the credit growth of the banking system in 2010-2020.
We believe that consumer finance remains an attractive business in the long term based on Vietnam’s labor force
characteristics. According to the General Statistics Office of Vietnam, 33 million people (accounting for nearly 63% of
Vietnam’s labor force) were informally employed as of Q4 2024, which implies a large potential market of underbanked
customers for consumer finance companies to exploit.

50
Bancassurance
We expect banca sales growth to resume at a modest level in 2025F

System-wide bancassurance sales (9M 2021–9M 2024) Bancassurance sales per banks under our coverage (VND bn)
1,200 0%
14,000 60% -10%
1,000
12,000 40% -20%
10,000 800 -30%
20%
-40%
8,000 600
0% -50%
6,000
400 -60%
-20%
4,000 -70%
200
2,000 -40% -80%

0 -60% 0 -90%
9M 2021 9M 2022 9M 2023 9M 2024 MBB ACB TCB STB VCB CTG HDB VIB VPB LPB TPB

Total bancassurance sales (VND bn) YoY growth 9M 2023 9M 2024 YoY growth (RHS)

 We believe the persistently weak bancassurance sales in 9M 2024 were primarily due to (1) subdued retail credit demand, (2) a
slow recovery in customer trust, and (3) potential disruptions from restructuring sales processes and organizations to align
with the tightened regulatory framework for bancassurance activities.
 Our compilation of bancassurance sales across banks under our coverage shows that VIB, VPB, LPB, and TPB saw the highest
YoY drops of more than 50% in 9M 2024. Additionally, total banca sales of MBB and ACB have been at the top of the market for
many months, according to our data compilation.
 The SBV still allows investment-linked product distribution via credit institutions.
 We believe that banks have prepared and actively supervised these activities to avoid mis-selling insurance products since
the investigations by authorities in late 2022. In addition, we observe that (1) current insurance penetration in Vietnam is low
and (2) banks can still promote bancassurance via preferential lending or deposit rates for their customers who buy insurance
products. As a result, we believe bancassurance can grow in the future but at a slower pace compared to the last ten years,
while requiring higher standards of regulatory compliance.

Source: IAV, Vietcap 52

New regulations on bancassurance to protect policy holders

Circular No.67/2023/TT-BTC and Decree No.46/2023/NĐ-CP issued by the Ministry of Finance (effective from November 2, 2023)
set guidelines for the implementation of the law on insurance business. Below are some key highlights.

1. Credit institutions are not allowed to advise, introduce, offer, or arrange investment-linked insurance contracts for their
customers within 60 days before and after the disbursement date of the entire loan.

2. Records of the consulting process for investment-linked products are required. There must be evidence of customer
acknowledgment of documents for long-term life insurance products.

3. More detailed requirements for bancassurance agents regarding human resources, technology capabilities, and organization
structure.

4. Insurers are responsible for periodically supervising and inspecting insurance product consulting activities carried out by
agents. They must promptly address complaints related to insurance product consultations and handle any violations that arise.

5. Changes in the caps for commissions on some life insurance products.

Overall, these regulations are in line with the MoF's guidance to enhance the legal framework for bancassurance activities starting
from Q4 2023. We think there could be a negative impact on the insurance premium growth rates in the short term and operating
expenses for both banks and insurers due to the more stringent regulatory requirements for bancassurance activities. However,
we believe the banks have prepared and actively supervised these activities to avoid mis-selling insurance products since the
investigation by authorities in late 2022. In addition, we observe that (1) current insurance penetration in Vietnam is still low and
(2) banks can still promote bancassurance via preferential lending or deposit rates for their customers who buy insurance
products. As a result, we believe bancassurance can still grow in the future but at a slower pace compared to the last ten years,
while requiring higher standards of regulatory compliance.

Source: SBV, Vietcap 53

Summary of bancassurance partnerships

Banks Life insurers Exclusive partnership Signing time Estimate deal size Profit recognition frequency

STB Dai-ichi Life Yes Dec-21 (Resigning) VND3.3tn (~USD140mn) Two years

ACB Sun Life Yes Nov-20 VND8.6tn (~USD366mn) 15 years

MBB MB Ageas (MBB's subsidiary) N/A N/A N/A N/A

TCB To establish a life insurance N/A N/A N/A N/A

company
VPB AIA Yes Mar-22 (Resigning) VND5.5tn (~USD234mn) One-off

VCB FWD Yes Apr-20 VND9tn (~USD383mn) Five years

CTG Manulife Yes Dec-21 VND5tn (~USD213mn) Five years

VIB Prudential Yes Jun-2023 (Resigning) N/A N/A

LPB Dai-ichi Life Yes Nov-22 (Resigning) VND1.6tn (~USD70mn) Two years

HDB FWD No Dec-21 N/A N/A

BID BIDV MetLife (BID's joint- Yes N/A N/A N/A

venture company)
TPB Sun Life Yes Nov-19 N/A N/A

Source: Company data, Vietcap. Note: TCB terminated Bancassurance’s exclusive partnership with Manulife in October 2024. 54
Other issues
Capital raising plans

% of
CAR Basel II
Capital shares in Transaction Estimated issuing
Yes/No Target investors December 31,
raising plan issue, post method value (VND tn)
2024
money
BID Yes 8.3% Under private placement: Private placement 9.0% 27.5
professional investors,
domestic & international
institutions
CTG* No 9.5%
VCB* Yes 6.10% Institutional investors Private placement 12.0% 36.3
ACB No 11.8%
HDB Plan to look for strategic shareholders with minimum stake sale of 10% 14.1%
VPB No 15.4%
MBB Yes 1.01% Viettel Group and other Private placement 11.7% Not yet modeled
professional investors

TCB Open to selling a 15% stake to the right strategic investor, which would likely 15.3%
involve a divestment by PE fund Warburg Pincus (owning a 7.9% stake)
STB Yes, in the form of recovery from sale of Mr. Tram Be’s 32.5% stake 10.1% 35.0
TPB No 14.0%
VIB Strategic shareholder CBA initiated divestment in 2024 11.9%
LPB No 13.4%

Source: Company data, Vietcap compilation and estimation. Note: CAR data for VCB and CTG, is from Q2 2024. 56
Contacts

Research

Nam Hoang, Head of Research Research team

+84 28 3914 3588, ext 124 +84 28 3914 3588
[Link]@[Link] research@[Link]

Ngoc Huynh, Manager

+84 28 3914 3588, ext 138
[Link]@[Link]

Quan Vu, Deputy Manager

+84 28 3914 3588, ext 364
[Link]@[Link]

Nga Ho, Analyst

+84 28 3914 3588, ext 516
[Link]@[Link]

Brokerage and Institutional Sales & Trading

Tuan Nhan Quynh Chau Dung Nguyen

Managing Director, Brokerage & Managing Director Director
Institutional Sales & Trading Brokerage Institutional Sales & Trading
+84 28 3914 3588, ext 107 +84 28 3914 3588, ext 222 +84 28 3914 3588, ext 136
[Link]@[Link] [Link]@[Link] [Link]@[Link]

57
Disclaimer

Analyst Certification of Independence

We, Nam Hoang, Quan Vu, Nga Ho, and Ngoc Huynh hereby certify that the views expressed in this report accurately reflect our personal views about the subject securities or issuers. We also certify that no part of our
compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The equity research analysts responsible for the preparation of this report receive compensation
based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and
Investment Banking.

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report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment.

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58