VPBank (HOSE: VPB) | Initiation Report, BUY - 1Y Upside +24.8%

Company Overview

Company Overview VPBank stands out as one of our top investment picks in the Banking sector for 2025, supported by a robust foundation and strong long-term growth prospects. We highly appreciate the bank’s balance sheet after the strategic placement to SMBC. Additionally, the ongoing restructuring of FE Credit has begun to yield positive results, marking a promising turnaround for its consumer finance division. 

Financial Performance

VPB achieved impressive growth during the 2020–2024 period. Its total operating income (TOI) and pre-tax profit (PBT) posted 12.4% and 11.3% CAGR, respectively. In 2024, the bank delivered an outstanding performance. Its consolidated net interest income (NII) reached VND 49,080bn (+28.6% YoY), highest among the private banks. VPB’s non-interest income (non-NII) rose to VND 13,175bn, +13.9% YoY, driven by a strong surge in payment and treasury services, which s grew by 61.7% YoY and contributed 33.4% to total non-NII.

In Q1 2025, VPB reported VND 5,015bn in PBT (+19.9% YoY), completing 19.8% of its full-year target. The parent bank’s loans to customers grew 6.1% to VND 653.3tn, outperforming the sector average of 3.93%. Its NIM slightly declined to 5.6% though. At the end of Q1 2025, VPB’s total consolidated assets exceeded VND 994 tn, while total equity reached over VND 151.2tn. The bank owns a one of the most well-capitalized equity in the banking system after the private placement to SMBC.

Investment Thesis

o       A leading private bank, well-positioned for a growth cycle ahead.

o       Ownership of FE Credit – A unique growth driver for VPB.

o       Impressive NIM and sustainable profitability outlook.

o       Industry-leading capital strength and strategic flexibility.

o       Attractive valuation with significant re-rating potential.

Valuation and Recommendation

We use three valuation methods—Residual Income (RI), P/B, and SOTP—to determine the fair value of VPB. We initiate a BUY recommendation with a 12-month target price of VND 23,600/share, +24.8% from the closing price of VND 18,900/share as of May 14, 2025. For long-term (3 years), we value VPB at VND 31,000/share (+64.3%).