- We cut our target price (TP) for TCB by 3.1% to VND43,100/share but maintain our BUY rating.
- Our lower TP is mainly driven by a lower valuation produced by both the residual income and target P/B approaches that is derived from (1) a 4.0% aggregate decrease in our projection for 2023-2027F NPAT-MI and (2) an increase in cost of equity for TCB from 15.3% to 15.5% due to an updated beta.
- We decrease our 2023F NPAT-MI by 7.4% to VND20.1tn (USD851mn; -0.4% YoY) as a result of a 10.1% decrease in our projection for 2023F NII following a 41-bp cut in NIM that is mainly driven by a 5-ppt cut in our assumption for the CASA ratio. We maintain our assumption for (1) the 2023F NPL ratio at 1.4% with a write-off rate over gross loans of 0.4% and (2) 2023F credit costs for both loans and bonds at 0.9%, which are TCB’s worst case scenarios for its NPL ratio and credit costs.