SACOMBANK (HOSE: STB) | 2Q26 Update, HOLD – Downside -8.4%

Asset Quality Pressures Weigh On Earnings

STB 2Q26 Performance

STB reported 1H26 TOI growth of 12.3% YoY to VND 17,488bn, driven by a 2.5x YoY increase in non-NII to VND 5,199bn. However, core earnings remained weak, with NII declining 8.6% YoY to VND 12,289bn amid only 1.5% YTD credit growth. Combined with provisioning expenses surging 6.4x YoY to VND 7,119bn, PBT fell 43.6% YoY to VND 4,136bn.

The NPL ratio rose to 7.5% from 6.4% at end-2025. Gross NPLs increased 19.5% YTD to VND 47,957bn, driven primarily by a 2.5x YTD surge in Group 4 loans. More importantly, Group 2 loans jumped to VND 16,827bn (+3.6x YTD, ~2.7% of loans from ~1.0% in 1Q26), signaling further asset-quality pressure ahead.

Management continues to prioritize asset-quality repair over growth, targeting 11.7% loan growth and 6.2% PBT growth in 2026 while maintaining elevated provisioning to reduce NPLs below 5%. We therefore expect 2H26 earnings to remain subdued, as resilient pre-provision profit is largely absorbed by credit costs; any earnings upside is likely to be used to accelerate provisioning rather than boost reported profit. The restructuring catalyst has also shifted further out, with management indicating another 1–2 years may be required and the proposed resolution of VAMC’s 32.5% stake still awaiting SBV feedback. Overall, we view 2026 as a balance-sheet repair year rather than the start of a growth or re-rating cycle.

Earnings Forecast

We lower our FY26E NIM to 2.9% from 3.5%, reflecting the sharper-than-expected increase infunding costs and continued pressure on core earnings. We also raise our FY26E/27E NPL ratio to 6.5%/6.0% from 2.1%/2.0%, respectively. Accordingly, we increase our credit cost assumptions to 2.3%/1.3% from 0.4%/0.4%. As a result, we cut our FY26E NPAT by 70.1% to VND 6,065bn.

Target Price and Rating

We lower our TP 2026 to VND 66,200/share from VND 72,600/share, primarily reflecting the weaker earnings outlook and a higher risk-free rate assumption of 8.0%, benchmarked against the prevailing 12-month deposit rate. Based on the closing price of VND 72,300/share on 14 August 2026, our revised target implies 8.4% downside. We therefore downgrade our recommendation from BUY to HOLD.