Vietcombank (HOSE: VCB) | Q2 2025 Update, BUY –1Y Upside +18.7%

In H1 2025, VCB delivered solid earnings while maintaining its position as one of the highest-quality banks in the market. The NPL ratio remained at 1.0%, the lowest among peers, while the LLR ratio, although down to 214% from 224% at end 2024, continued to be the highest in the sector. Financial performance was broadly in line with our expectations, with TOI reaching VND 35,133tn (+3.2% YoY), equivalent to 46.8% of our full-year forecast. PBT came in at VND 21,894tn, fulfilling 49.7% of our forecast. Earnings was supported by robust growth in Non-NII, while NII remained flat YoY as credit growth was offset by a slight decline in NIM.

We have rolled forward our valuation to mid-2026, setting a new 12-month target price of VND 74,800/share, representing a 18.7% potential upside from the August 12 close of VND 63,000. We maintain our BUY recommendation at the current market level, based on: (i) resilient H1 2025 earnings with best-in-class asset quality, and (ii) the resolution of tariff-related uncertainties, paving the way for stronger performance in H2 2025

As of August 12, VCB has delivered a 3.3% YTD return, underperforming the market due to its large FDI client exposure which could be impacted by the tariff concerns. In H1 2025, PBT reached VND 21,894bn (+5.1% YoY), equivalent to 49.7% of our FY2025 forecast, supported by robust Non-NII growth (+20.5% YoY) driven by strong FX and gold trading gains (+55.1% YoY) and higher recovery income from overdue debts. NII was flat (-0.5% YoY) as credit growth gains were offset by a contraction in NIM to 2.6% (from 3.0% in H1 2024).

We also highlight two potential catalysts for further upside ahead: (i) acceleration in credit growth and NIM recovery in H2 2025, supported by medium and long-term lending expansion, and (ii) potential new FII inflows in to VCB if Vietnam is upgraded to emerging market status, which could trigger a sector-wide re-rating and lift VCB’s valuation multiple.