We cut our target price (TP) by 30.2% to VND14,800/share and downgrade our rating for LPB from BUY to OUTPERFORM.

Our lower TP mainly results from (1) a 5.7% aggregate decrease in our projection for 2022-2026F NPAT, (2) an increase in our assumption for LPB’s cost of equity from 13.0% to 16.6% and (3) a cut in our target P/B multiple from 1.33x to 1.00x, which are partly offset by the positive effect of rolling our TP horizon forward to mid-2023.

We cut our projection for 2022F NPAT by 10.6% to VND4.6tn (USD185mn; +59.5% YoY), which is primarily derived from (1) a 45.8% decrease in NFI (including FX trading) as we move our assumption for the recognition of the first batch of the upfront bancassurance fee from 2022 to 2023, in addition to (2) a 23.3% YoY increase in provision expenses as we raise our assumption for write-offs to gross loans from 0.2% to 0.4%. These factors are partly offset by a 4.3% increase in NII following an 18-bp upward revision in NIM.

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