SAHABANK (HOSE: SHB) | 3Q26 Earnings First Take, BUY – Upside +82.9%

Strong Headline Earnings Yet Weaker Core Profitability And Rising Asset Quality Risks

3Q26 Performance: SHB reported 3Q26 PBT of VND 5,166bn (+57.1% YoY, +16.4% QoQ), supported by a 56.8% QoQ decline in credit provisions and strong non-interest income. TOI rose 42.8% YoY to VND 9,147bn, led by net fee income (+120% YoY). However, core momentum weakened sequentially, with NII down 3.2% QoQ and pre-provision operating profit down 17.5% QoQ, while CIR rose to 25.4%. NIM improved 10bps QoQ to 2.3% but remained 40bps below end-FY25.

For 9M26, NII declined 6.4% YoY as interest expenses surged 47.9%, while net fee income more than tripled to VND 5,744bn, largely driven by VND 5,679bn in payment services income, raising questions about its sustainability. On the balance sheet, loans grew just 1.6% QoQ (+9.0% YTD), trailing deposit growth of 13.0% YTD; CASA declined to 6.7%, other assets rose 33% YTD to VND 106.4tn and LLR fell to 81.7%.

FY26 Earnings Delivery: 9M26 PBT of VND 14,309bn (+17.0% YoY) fulfilled ~81% of both management's FY26 target and our forecast. Gains from the SHBFinance divestment, for which Krungsri completed full payment on 15 Oct 2026, may provide one-off upside in 4Q26. However, fee income sustainability, subdued NIM and rising credit risks could offset this support.

FY27 Outlook - Limited NIM recovery and higher credit costs constrain core growth: With weak CASA, elevated funding costs and slower loan growth, we expect NIM recovery to be gradual and FY27 earnings to remain dependent on fee income and credit costs. Rising NPLs and declining coverage could require higher provisioning, and we see downside risks to underlying earnings if exceptional fee income normalizes.

Investment Implications: Maintain BUY, but Cautious Pending Greater Earnings Transparency

SHB trades at 0.7x TTM P/B and 4.1x TTM P/E. Our TP of VND 19,300 implies 82.9% upside from the 03 Nov 2026 close of VND 10,550, and we maintain BUY. However, we remain cautious given weak core NII, unusually high fee income, rising receivables and deteriorating asset quality, while the pending listing of new shares from the capital increase to VND 53,442bn may add supply pressure. We would look for sustained NIM improvement, clearer disclosure of fee income and L/C-related exposures, and stabilizing NPL formation before turning more constructive.