- We maintain our target price (TP) for STB at VND38,100/share and maintain a BUY rating. Our TP is unchanged because (1) the positive impact on our residual income valuation from a 1.7% aggregate increase in our 2024-2028F projected NPAT (-9.8%/+13.6%/+5.1%/-1.1%/-0.6% in 2024/25/26/27/28F, respectively) is offset by (2) the negative impact on our target P/B valuation of our lower 2024F earnings forecast. We maintain our target P/B for STB at 1.1x.

- We increase our aggregate 2024-2028F net income mainly due to a 10.1% increase in aggregate NOII as we believe STB’s strong digitalization over the last 2 years and economic recovery will support STB’s settlement and bancassurance incomes. This outweighs a 2.1% increase in aggregate OPEX and a 0.6% increase in aggregate provision expenses.

- We've reduced our 2024F NPAT forecast by 9.8% to VND9.4tn (+21.4% YoY) primarily due to (1) lower-than-expected 2023 credit growth at 10.1%, and (2) decreased assumptions for 2024F recovery income from bad debt sales due to the sluggish real estate market, resulting in an 11.9% decline in 2024F NOII compared to our previous forecast. Additionally, we anticipate 2024F recovery income from selling Phong Phu-related debts to be VND2.1tn, down from VND2.8tn, as STB's net VAMC balance at the end of 2023 stood at VND1.8tn, contrary to our earlier expectation of clearing all VAMC balances by 2023.

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