VietinBank (HOSE: CTG) | Initiation Report, BUY – 1Y Upside +29.7%

Improving Return Supports Narrowing Valuation Discount

Rating: BUY - Target price VND 41,250/share (+29.7%)

We initiate coverage of CTG with a BUY rating and VND 41,250 target price, implying 29.7% upside from the August 24, 2026 closing price of VND 31,800. Our positive view is underpinned by CTG's leading state-owned banking franchise, structural funding advantage, resilient asset quality, improving capital flexibility, and attractive valuation relative to peers.

Investment Rationales

A leading SOCB positioned for the next credit cycle. CTG combines a sizeable corporate franchise with longstanding relationships across SOEs, large corporates, FDI companies and SMEs. We believe this positions the bank well to capture financing demand from infrastructure investment, manufacturing expansion and broader economic growth. At the same time, increasing exposure to retail and SMEs should support higher lending yields and improve risk-adjusted returns.

Structural funding advantage supports NIM recovery. CTG's broad customer base and transaction-banking relationships underpin a sizeable low-cost deposit franchise, with CASA among the highest among listed banks. CoF stood at 3.5% in 2Q26, second only to VCB among major listed banks, helping CTG absorb system-wide funding pressure. We expect FY26E NIM to improve to 2.7% from 2.6% in FY25 and remain at 2.8% in FY27E-FY28E.

Asset quality remains supportive of earnings. CTG has maintained an NPL ratio of around 1.1%-1.3% in recent periods, with loan-loss coverage at c.134% in 2Q26. While NPL formation has increased modestly, we believe CTG's debt-recovery capabilities, dedicated collection infrastructure and early-warning systems should keep credit costs manageable. Improving capital flexibility should further support loan growth and earnings.

Valuation discount unjustified. CTG trades at 1.3x trailing P/B and 1.2x FY26E P/B, below sector averages of c.1.5x and 1.4x, and at a meaningful discount to VCB and BID. We believe this discount increasingly understates CTG's improving return profile, with FY26E ROE of 20.7% and FY25-FY28E NPAT-MI CAGR of 15.7%. We therefore see scope for a gradual re-rating as earnings, NIM and capital flexibility improve.

Valuation and Rating

We forecast FY26E NPAT-MI of VND40.1tn (+15.9% YoY) and FY27E NPAT-MI of VND45.9tn (+14.4% YoY), supported by sustained loan growth, NIM recovery and controlled credit costs.

We apply a blended valuation approach, assigning equal weights of 50%/50% to Residual Income and P/B, resulting in a 12-month target price of VND41,250/share. Our valuation assumes a 16.9% cost of equity, a 3.0% terminal growth rate, and a 1.5x FY26E P/B multiple, broadly in line with CTG's historical trading average.

At VND31,800/share as of August 24, 2026, our target price implies 29.7% upside. Despite CTG's share price declining 11.0% YTD and 22.2% from its 52-week high, we believe the recent correction provides an attractive entry point given the bank's double-digit earnings growth, recovering NIM and improving capital capacity. Accordingly, we initiate coverage with a BUY rating on CTG.