TPB [OUTPERFORM +11.4%] - High NPL formation erodes provisioning buffer - Update
  • 2023-08-07T00:00:00
  • Company Research

- We lower our target price (TP) for TPB by 4.4% to VND21,500/share and downgrade our rating from BUY to OUTPERFORM as the bank’s share price has increased by 37.6% YTD. Our lower TP is mainly due to an 8.7% decrease in our aggregate 2023-2027F NPAT (-6.2%/-8.1%/-10.4%/-9.6%/-8.2% for 2023/24/25/26/27F, respectively).

- Our 2023F net income of VND6.5tn (USD269mn; +3.1% YoY) is 6.2% lower than our previous forecast due to (1) a 4.7% cut in NII following a 13-bp cut in NIM and (2) 17.2% lower NOII from the weak performance of bancassurance and trading investment securities, which are partly offset by (1) a 2.7% decrease in OPEX and (2) a 32.5% decrease in provision expenses.

- We maintain our P/B target of 1.10x to reflect our concerns regarding (1) TPB’s loan exposure to real estate developers and construction companies increasing to 14.5% in Q2 2023 from 12.8% in Q2 2023 and (2) the deterioration the bank’s provision buffer and capital buffer as its LLR and CAR in Q2 2023 were 60.9% and 11.1% vs 135% and 12.5% in Q4 2022, respectively.

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