Sacombank (HOSE: STB) | Initiation Report, BUY - FW2026 Upside +28.2%

Company Information

Established in 1991, Saigon Thuong Tin Commercial Joint Stock Bank (STB) was among the first joint-stock commercial banks in Ho Chi Minh City. It has been listing on the Ho Chi Minh Stock Exchange (HOSE) since 2016. Historically, the bank’s growth model focused on retail and SME lending.

In the previous cycle, the bank faced issues with several sizable legacy bad debts. After nearly a decade under the SBV’s restructuring program, the bank is about to complete the collection of those legacy bad loans to be ready for a new growth cycle. Looking ahead, STB is well positioned to deliver robust credit growth of 16% CAGR over 2025–2028, and improvement in operational efficiency.  

Financial Performance

Despite being under a restructuring scheme, STB delivered solid business results during 2021–2024. In 2024, net interest income (NII) rose 11.1% YoY to VND 24,532bn, representing an impressive three-year CAGR of 27.0%. Non-interest income (non-NII) remained flat at VND 4,145bn compared to 2023. Total operating income (TOI) reached VND 28,677bn (+9.6%) in 2024. In H1 2025, STB reported TOI of VND 15,566bn (+11.0% YoY), supported by strong 30.8% YoY growth in net service income and 11.4% YoY growth in NII to VND 13,448bn despite gains from FX and investments remained subdued.

On the operating expenses side, the cost to income ratio (CIR) remained high at around 48%–50%, among the highest across listed banks but showing a declining trend from 49.2% in 2023 to 45.8% in H1 2025. The non-performing loan (NPL) ratio was controlled at around 2.46% by end H1 2025, while the loan loss reserve (LLR) ratio improved to 75.4%, up from 68.4% at end of 2024 and 68.8% in 2023.

Net profit after tax (NPAT) reached VND 10,087bn (+30.7%) in 2024, supported by a VND 1,587bn provision reversal from the sale of the legacy asset (Phong Phu Industrial Park) that reduced provision expense in 2024 to VND 1,974bn, a 46.5% YoY decline. In H1 2025, NPAT advanced 35.0% YoY to VND 5,790bn as CIR declined significantly to 45.8% from 52.8% in H1 2024.

Investment Rationales

We view STB as a solid turnaround story in the banking sector, underpinned by the resolution of legacy assets, strong credit growth prospects, improving efficiency, and a still reasonable valuation despite recent share price gains:

Legacy Asset Resolution Nearing Completion:

STB has fully provisioned VND 12,125bn of loans transferred to VAMC, effectively covering its remaining legacy assets. These include: (i) the bad debt secured by the land-use rights of Phong Phu Industrial Park (principal: VND 5,514bn; accrued interest: VND 2,420bn; total: VND 7,934bn), and (ii) the bad debt linked to Mr. Tram Be’s related parties (principal: VND 6,611bn; accrued interest: VND 13,450bn; total: VND 20,061bn), collateralized by a 32.5% equity stake in STB, currently valued at approximately VND 34,000bn. STB decided to sell those collateral assets to recall all debt principals and accrued interests.

Strong Credit Growth Backed by Ample Credit Demand and Strong CAR:

With a new credit quota of 16% and credit growth tailwinds system wide, STB is expected to deliver 16% average credit growth during 2025–2029, higher than the 12.6% average of the previous cycle. The solid credit growth is underpinned by recovering demand for consumer and mortgage loans. Leveraging its well-established branding and extensive banking network in Southern Vietnam, STB is well placed to capitalize on retail lending opportunities, particularly in consumer finance and housing loans.

Provision reversals and income recognition from the resolution of legacy assets including the Phong Phu Industrial Park and the 32.5% stake sale are expected to lift STB’s CAR above 15%, providing ample capital headroom to support sustainable and robust credit growth in the coming period.

Solid NIM from Core Lending Supported by Improving CASA:

Excluding one-off gains from the Phong Phu Industrial Park and the 32.5% stake sale, STB’s NIM from core banking is expected to remain resilient at 3.6% in 2025, broadly unchanged from 2024, before edging up to 3.7% in both 2026 and 2027. This stability is underpinned by a recovery in consumer and mortgage lending alongside continued improvements in CASA. Besides, STB’s headline NIM will see an abnormal uplift from one-off gains in the above collateral disposal transactions

CIR Improvement Driven by Cost Optimization and Digitalization Efforts:

The management has implemented concrete measurements to bring CIR down closer to the sector average, including a reduction in headcount (7.9% YTD) and a cut in ineffective transaction offices. CIR is projected to go down to approximately 42% by 2028 (if excludes the abnormal profit booking from the legacy asset reversals).

Compelling Valuation:

At the current price level, STB is trading at 1.8x P/B, broadly in line with the sector average. However, once income from legacy asset resolutions is factored in, STB’s underlying FW2026 P/B at the current price declines to 1.2x, with further improvements in 2027–2028 as we forecast the proceeds from the 32.5% stake disposal to be booked in three years. This indicates that the stock is trading at a steep undervalue once the 32.5% stake sales is carried out.

Valuation and Recommendation

We apply two valuation methods Residual Income and Price-to-Book (P/B) to determine the fair value of STB with weight of 70% for P/B and 30% for Residual Income. Our Target Price arrived at VND 72,600 per share. We initiate a BUY recommendation for STB with a potential upside of 28.2% from the closing price of VND 56,600 as of Sep 29, 2025.