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Research CenterForeign Trade of Viet Nam JSC Bank (HOSE: VCB)| BUY – 1Y Upside +21.0%

Foreign Trade of Viet Nam JSC Bank (HOSE: VCB)| BUY – 1Y Upside +21.0%

Company Research
06/02/2025

Company Overview

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcom-bank), formerly the Bank for Foreign Trade of Vietnam, was established on April 1, 1963. After more than 60 years of development, Vietcombank has become the largest commercial bank in Vietnam. Vietcombank listed on the Ho Chi Minh City Stock Exchange (HOSE) in 2007. Its current charter capital reached VND 55,891 billion (bn) making it one of the leading banks in terms of market capitalization in Vietnam.

Financial Performance

VCB has demonstrated strong performance over the past years, with total operating income (TOI) increasing from VND 45,730 bn VND in 2019 to VND 67,723 bn in 2023, reflecting a CAGR of approximately 10.4% amid Covid-19 and macro volatility. VCB NPAT grew from VND 29,899 bn in 2022 to VND 33,033 bn in 2023, marking a growth rate of around 10.5%.Net interest income (NII) increased from VND 34,577 bn in 2019 to VND 53,621 bn in 2023, indicating stability in its primary revenue source.

The bank's non-performing loan (NPL) ratio rose from 0.68% at the end of 2022 to 1.22% at the end of Q3/2024, but it remains low compared to the banking sector thanks to VCB's superior asset quality.

Business Prospects

VCB has a favorable business outlook for the next three years due to:

  • High credit growth: The Vietnamese government targets ambitious economic growth of 7.5% for the 2025-2030 period, with annual credit growth target of 15%, commitment for more aggressive fiscal policy and improve M2 supply to drive banking and business activities;
  • Stable deposit interest rates: Maturing deposits in Q4/2023 and Q1/2024 are expected to return to the system at lower interest rates, helping to reduce funding costs for the bank by the end of 2024;
  • High-quality assets: VCB possesses one of the best asset qualities in the industry, with a provision ratio averaging 2% of total loans and a non-performing loan coverage ratio of up to 230% as of 2023.

In 2025, VCB plans a private placement of 6.5% to raise capital and improve its capital adequacy ratio (CAR). The bank expects its CAR to reach 13-13.5% during 2025-2026 after the issuance.

Based on valuation projections using DCF, and P/B methods, SBBS recommends a BUY with a target price of VND 111,000/share, an upside of 21% from current price of VND 91,700 per share as of 15/11/2024.
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