We cut our target price (TP) for STB by 19.7% to VND29,800/share but maintain our BUY rating.

Our lower TP is mainly derived from (1) a 16.6% aggregate decrease in our forecast for 2022-2026F NPAT, (2) an increase in our assumption for STB’s cost of equity from 13.0% to 16.2%, and (3) a decrease in our target P/B multiple from 1.45x to 1.20x, which are partly offset by the positive impact of rolling our TP horizon forward to end-2023.

We decrease our 2022F NPAT by 10.7% to VND4.4tn (+30.3% YoY) mainly due to (1) a 1.8% decrease in NII following a 2-bp cut in NIM, and (2) a 17.5% decrease in pure NFI following lower-than-expected 9M 2022 results, which are partly offset by a 9.9% decrease in provision expenses following our downward revision for STB’s NPL ratio. We maintain 2022F VAMC provision expenses at ~VND6tn.

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