Earnings Report /
Vietnam

Vietcombank: Lasting revenue pressures and positive cost cuts in the first half

  • Extended margin expected to persist ahead; stable provisioning level in the short-term

  • Q2 22 and full-year outlook: Expecting volatility throughout the year and catalysts at the end of the year

  • We revise down our target price by 14% to VND96,900/share. This is equivalent to a Buy recommendation.

Thanh Nguyen
Rong Viet
15 June 2022
Published by

VCB maintained its growth momentum in Q1 22 with moderate earnings results (15% yoy), driven by robust net interest income and net profit margin. Non-interest income was impacted by the bancassurance fee bonus, zero transaction fee package and high comparison base. Credit cost margin was a minor growth factor despite the reversals of provisions for interbank lending.

We expect the provisioning level in the next quarter to be sustained and become the leading growth factor. NIM will be maintained from Q1 22 but still suffer from the high comparison base effect, putting tension on the net interest income growth despite the resiliency of credit expansion. Total operating income will be supported by the bancassurance segment. Earnings growth is projected to pick up strongly to 56% yoy, reaching VND7.7tn.

We maintain our positive view on the capital raising catalyst, while being neutral on the zero-dong bank deal. Given the weak sentiment towards the banking sector and the recent valuation multiple re-rating on a sector-wide basis, we revise down our target price by 14% to VND96,900/share. This is equivalent to a Buy recommendation with an upside of 26% from the closing price of 14 June 2022.