• We cut our target price (TP) for VCB by 6.4% to VND96,700/share but maintain a BUY rating.
• Our lower TP results from (1) a 17.6% decrease in our projection for aggregate 2022-2026F NPAT-MI, (2) an increase in our assumption for VCB’s cost of equity from 13.0% to 13.1% and (3) a decrease in our target P/B assumption from 3.46x to 3.22x, which are partly offset by the positive impact of rolling our TP horizon forward to end-2023.
• We lower our 2022F NPAT-MI forecast by 8.7% to VND26.6tn (USD1.1bn; +21.5%) mainly due to (1) a 4.4% decrease in NII following a 16-bp downward revision in NIM, (2) 3.1% decrease in NFI (including FX trading) and (3) 2.9% increase in provision expenses as a result raising our NPL ratio assumption from 0.7% to 0.9%.

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