Vietnam Banks: The Sector To Own Significant Potential Upside in The Next 12 Months

Asia Pacific Equity Research
14 December 2020
Vietnam Banks
The sector to own; Significant potential upside in the
next 12 months
Vietnam
Banks
Harsh Wardhan Modi AC
(65) 6882-2450
harsh.w.modi@jpmorgan.com
Vietnam banks is our preferred banking sector in the region. The thesis of J.P. Morgan Securities Singapore Private
high, self-sustaining growth is intact, following relative GDP strength in Limited/ J.P. Morgan Securities (Asia Pacific)
Limited/ J.P. Morgan Broking (Hong Kong)
2020E (+2.5%), and an acceleration in 2021E (+8.3%). This supports faster Limited
balance sheet growth, driving both NII and non-II. In this context, stocks have
Daniel Andrew Tan, CFA
performed well, outperforming the rest of Asean by 30% YTD. Yet, we (63-2) 8554-2413
continue to see significant potential upside. TCB and VPB offer 72%/29% danielandrew.o.tan@jpmorgan.com
potential upside to our PTs, with potential FOL changes as a key catalyst. For J.P. Morgan Securities Philippines, Inc.
VCB and ACB, the bulk of the re-rating has happened, in our view; the Rajiv Batra
investment case is led by EPS growth and book value compounding. (65) 6882-8151
rajiv.j.batra@jpmorgan.com
 Increasing EPS and PT: We increase our 2020-22E EPS by 11%/9%/2%
J.P. Morgan Securities Singapore Private
across the sector, and our PT by 7-36%. The EPS changes are driven by Limited
lower provisions, as well as higher volume growth, on account of higher
GDP. The PT increases broadly follow the EPS shifts, with adjustments
made for our confidence in the forecasts and growth prospects. Key risks to
our view include worse-than-expected slippages on asset quality, weaker-
than-expected volume growth and macro risks such as sequential waves of
domestic COVID-19 outbreaks.
 FOL: TCB and VPB trade at 1.06x/1.12x 2021E P/B, respectively, for
16.7%/18.9% average RoE. The gap is mainly due to FOL, which the banks
have set at 22-23%, below the regulatory limit of 30%. In case the Ministry
of Finance's draft guidance (link) is adopted, this will open up foreign room
in both stocks. We estimate ACB/TCB/VPB foreign ADT at US$0.4-
0.8m/day in the last 6M (assuming ~5% premium) vs US$1.6m at VCB.
Expansion of FOL allows foreigners to take larger positions at market price,
likely driving volumes and re-rating.
 Growth: SBV expects 8-10% credit growth this year (link). This quota is
likely to be higher next year, potentially at mid-teens. Within this, we expect
banks with higher capital and better asset quality to receive higher quotas.
TCB has the highest CAR within our coverage at 17.4%, which should
allow for a 20% loan CAGR from 2020-22E, in our view. VCB’s capital
raising plan (link) should allow for faster growth over the next 2Y.
 Asset quality: We expect asset quality to be benign in the next 2Y, as we
forecast 199/178/170bps gross credit costs in 2020-22E, respectively,
skewed to the upside by VPB. We expect 1.1-4.1% NPL ratio by 2021E.
Slippages are not impossible, but should be limited, in our view, given low
restructured loans (1.3-8.1% of book). Over 90% secured loans and ~60%
LTVs at ACB could lead to a positive surprise.
See page 51 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
This document is being provided for the exclusive use of jfoo@kingsmeadam.com.
Harsh Wardhan Modi Asia Pacific Equity Research
(65) 6882-2450 14 December 2020
Table of Contents
Investment summary................................................................3
Increasing EPS and PTs ..........................................................5
FOL is a key driver ...................................................................6
Loan growth to accelerate .......................................................7
Asset quality remains benign..................................................8
Valuations .................................................................................9
EPS revisions..........................................................................10
Asia Commercial Bank...........................................................11
Techcombank .........................................................................21
Vietcombank ...........................................................................31
VP Bank ...................................................................................41
Table 1: Vietnam Banks Valuation
Bank Price Rating PT PE (x) PB (x) Dividend Yield (%) RoE (%)
(VND) (VND) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
ACB 28,200 OW 32,000 9.9 9.0 7.9 1.79 1.51 1.28 - 0.9 0.9 19.9 18.2 17.6
TCB 26,200 OW 45,000 8.2 6.8 5.8 1.26 1.06 0.90 - - - 16.6 16.8 16.8
VCB 99,900 OW 110,000 23.0 19.5 15.7 3.94 3.11 2.65 0.8 0.8 0.8 18.4 17.8 18.2
VPB 28,700 OW 37,000 7.5 6.4 5.8 1.36 1.12 0.94 - - - 19.9 19.0 17.6
Sector 12.1 10.4 8.8 2.08 1.70 1.44 0.2 0.4 0.4 18.8 18.0 17.6
Source: Bloomberg Finance L.P., J.P. Morgan estimates. Priced as of 14 December 2020.
Equity Ratings and Price Targets

Mkt Cap Price Rating Price Target
Company Ticker ($ mn) CCY Price Cur Prev Cur End Prev End Date
Date
Asia Commercial Bank ACB VN 2,636.34 VND 28,200.00 OW n/c 32,000.00 Dec-21 30,000.00 n/c
Techcombank TCB VN 3,966.18 VND 26,200.00 OW n/c 45,000.00 Dec-21 33,000.00 Jun-21
Vietcombank VCB VN 16,024.85 VND 99,900.00 OW n/c 110,000.00 Dec-21 95,000.00 Jun-21
VP Bank VPB VN 3,025.92 VND 28,700.00 OW n/c 37,000.00 Dec-21 32,000.00 Jun-21
Source: Company data, Bloomberg Finance L.P., J.P. Morgan estimates. n/c = no change. All prices as of 14 Dec 20.

(65) 6882-2450 14 December 2020
Investment summary
Vietnam banks is our preferred banking sector in the region. The thesis of high, self-
sustaining growth is intact, following relative GDP strength in 2020E (+2.5%), and
an acceleration in 2021E (+8.3%). This supports faster balance sheet growth, driving
both NII and non-II.
Resilient GDP in 2020E, Figure 1: Vietnam real GDP growth trend (%)
acceleration in 2021E 10
8.3
8 7.1 7.0
6.7 6.8
6.2 6.0 6.2
6 5.3 5.4
4
2.5
2
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E
Source: CEIC, J.P. Morgan estimates
Current account surplus to Figure 2: Vietnam current account % of GDP

sustain, providing a runway for 8%
growth
4%
0%
-4%
-8%
-12%
2020E
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
Source: CEIC, J.P. Morgan estimates.
EPS growth to accelerate in Table 2: Vietnam banks 2018-22E EPS growth

2021-22E
EPS (VND) 2018 2019 2020E 2021E 2022E
ACB 2,366 2,744 2,844 3,124 3,592
y/y gr 153.4% 16.0% 3.6% 9.8% 15.0%
TCB 2,692 2,871 3,197 3,828 4,531
y/y gr 11.2% 6.7% 11.3% 19.8% 18.4%
VCB 3,323 4,481 4,346 5,128 6,370
y/y gr 66.6% 34.9% -3.0% 18.0% 24.2%
VPB 3,025 3,376 3,836 4,451 4,956
y/y gr 7.3% 11.6% 13.6% 16.0% 11.3%
Source: J.P. Morgan estimates, Company data.

(65) 6882-2450 14 December 2020
In this context, the stocks have performed well, outperforming the rest of Asean by
30% YTD. Yet, we continue to see significant potential upside. TCB and VPB offer
72%/29% potential upside to our PTs, with potential foreign ownership limit (FOL)
changes as a key catalyst. For VCB and ACB, we believe the bulk of re-rating has
happened; the investment case is led by EPS growth and book value compounding.
Vietnam banks have Figure 3: Asean banks stock price performance

outperformed the rest of Asean 30%
by 30% YTD 18% 20%
20% 16% 15% 14%
6% 8%
10% 3%
0%
-10% -3%
-6%
-20%
-22% -20%
-30%
Thailand Philippines Singapore Indonesia Malaysia Vietnam
1M chg YTD chg
Source: J.P. Morgan estimates, Bloomberg Finance L.P.
ACB (shift to Ho Chi Minh Figure 4: Vietnam banks stock price performance
Exchange, insurance deal) and 70%
VPB (cash loan regulation, FE 61%
Credit potential IPO) led 60%
performance this year 50% 44%
40%
30%
15% 17%
20% 14% 11%
11%
10% 6%
0%
VCB TCB VPB ACB
1M chg YTD chg
Source: Bloomberg Finance L.P.
Still significant upside to PTs, Table 3: Vietnam banks potential upside to PTs
led by TCB
Potential
Bank Price Rating PT upside to PT
(VND) (VND)
ACB 28,200 OW 32,000 13%
TCB 26,200 OW 45,000 72%
VCB 99,900 OW 110,000 10%
VPB 28,700 OW 37,000 29%
Sector

(65) 6882-2450 14 December 2020
Increasing EPS and PTs

We increase our 2020-22E EPS by 11%/9%/2% across the sector, and our PTs by 7-
36%. The EPS changes are driven by lower provisions, as well as higher volume
growth, on account of higher GDP. The PT increases broadly follow the EPS shifts,
with adjustments made for our confidence in the forecasts and growth prospects. Key
risks to our view include worse-than-expected slippages on asset quality, weaker-
than-expected volume growth and macro risks such as sequential waves of domestic
COVID-19 outbreaks.
Increasing PTs across the sector Table 4: Vietnam banks PT changes
In VND Old PT New PT % change

ACB 30,000 32,000 7%
TCB 33,000 45,000 36%
VCB 95,000 110,000 16%
VPB 32,000 37,000 16%
Source: J.P. Morgan estimates.
Our EPS estimates are higher vs Table 5: Vietnam banks EPS changes and EPS vs. Street
the Street for TCB and VPB
% change in EPS JPMe vs Street
Bank FY20E FY21E FY22E FY20E FY21E FY22E
ACB 0% 1% -6% -8% -13% -9%
TCB 16% 15% 11% 4% 7% 11%
VCB 13% 3% -1% 0% -2% -1%
VPB 17% 17% 5% 8% 7% 3%
Sector 11% 9% 2% 1% 0% 1%
Expecting lower credit costs in Table 6: Gross credit costs trend from 2019-22E
2021-22E
Gross credit costs 2019 2020E 2021E 2022E Total 2020-22E
ACB 0.11% 0.45% 0.40% 0.40% 1.25%
TCB 0.47% 1.16% 0.87% 0.76% 2.80%
VCB 0.99% 1.05% 0.90% 0.85% 2.80%
VPB 5.71% 5.30% 4.95% 4.80% 15.05%
Sector 1.82% 1.99% 1.78% 1.70% 5.47%
Table 7: Net credit costs trend from 2019-22E
Net credit costs 2019 2020E 2021E 2022E Total 2020-22E

ACB -0.46% 0.38% 0.19% 0.19% 0.7%
TCB -0.08% 0.74% 0.44% 0.33% 1.5%
VCB 0.53% 0.79% 0.57% 0.52% 1.9%
VPB 4.93% 4.56% 4.20% 4.05% 12.8%
Sector 1.23% 1.62% 1.35% 1.27% 4.24%

(65) 6882-2450 14 December 2020
FOL is a key driver

TCB and VPB trade at 1.06x/1.12x 2021E PB, respectively, for 16.7%/18.9%
average RoE. The gap is mainly due to FOL, which the banks have set at 22-23%,
below the regulatory limit of 30%. In case the Ministry of Finance's draft guidance
(link) is adopted, this will open up foreign room in both stocks. We estimate
ACB/TCB/VPB foreign ADT at US$0.4-0.8m/day in last 6M (assuming ~5%
premium) vs US$1.6m at VCB. Expansion of FOL allows foreigners to take larger
positions at market price, likely driving volumes and re-rating.
TCB and VPB are at respective Table 8: Foreign ownership of key Vietnamese banks
self-determined FOLs
State-owned banks Foreign ownership (%) Own Limit
BIDV BID VN Equity 17.3
Vietinbank CTG VN Equity 29.0
Vietcombank VCB VN Equity 23.7
Private banks
Sacombank STB VN Equity 9.2
Military Bank MBB VN Equity 23.0 23.0
Asia Commercial Bank ACB VN Equity 30.0
Saigon Hanoi Bank SHB VN Equity 6.5
VP Bank VPB VN Equity 23.4 23.4
Techcombank TCB VN Equity 22.5 22.5
Source: Bloomberg Finance L.P.
Stocks at FOL have significantly Figure 5: Last 6M ADT and estimated foreign ADT (In USD Mn)
lower foreign ADT 10 9.2
8 7.2
6 5.2
3.5
4
1.6
2 0.8 0.5 0.4
-
TCB ACB VPB VCB
Last 6M ADT Foreign ADT
Source: J.P. Morgan estimates, Bloomberg Finance L.P. Assuming 5% foreign premium.
Foreign share of trades are Figure 6: Foreign share of shares traded

much lower at TCB/VPB/ACB 50% 46%
40%
30%
20%
9% 7%
10% 7%
0%
VCB TCB VPB ACB

(65) 6882-2450 14 December 2020
Loan growth to accelerate

SBV expects 8-10% credit growth this year (link). This quota is likely to be higher next
year, potentially at mid-teens. Within this, we expect banks with higher capital and
better asset quality to receive higher quotas. TCB has highest CAR within our coverage
at 17.4%, which should allow for a 20% loan CAGR from 2020-22E, in our view.
VCB’s capital raising plan (link) should allow for faster growth over the next 2Y.
Expecting high volume growth Figure 7: Vietnam banks loan CAGR 2020-22E
across the sector, led by TCB 25%
and VCB
20% 19%
20%
15% 15%
15%
10%
5%
0%
TCB VCB ACB VPB
TCB has highest CAR in our Figure 8: Vietnam banks capital adequacy ratio (CAR) as of 3Q20
coverage at 16.7% 20.0%
16.7%
16.0%
11.6% 11.3%
12.0% 10.5%
8.0%
4.0%
0.0%
TCB VPB ACB VCB
Source: J.P. Morgan estimates, Company data. Estimated for VCB.
Low NPLs could allow for higher Figure 9: Vietnam banks NPL ratio (3Q20)
quotas in 2021 4.0% 3.65%
3.5%
3.0%
2.5%
2.0%
1.5%
1.01%
0.83%
1.0% 0.60%
0.5%
0.0%
VPB VCB ACB TCB

(65) 6882-2450 14 December 2020
Asset quality remains benign

We expect asset quality to be benign in the next 2Y, as we forecast 199/178/170bps
gross credit costs in 2020-22E, skewed to the upside by VPB. We expect a 1.1-4.1%
NPL ratio by 2021E. Slippages are not impossible, but should be limited given low
restructured loans (1.3-8.1% of book). Over 90% secured loans and ~60% LTVs at
ACB could lead to a positive surprise.
Low restructured loans Figure 10: Vietnam banks restructured loans (% of loan book)
9.0% 8.1%
8.0%
7.0%
6.0%
5.0%
4.0% 3.1% 3.1%
3.0%
2.0% 1.3%
1.0%
0.0%
VCB ACB TCB VPB
Source: Company data. As of 3Q20.
NPLs to remain manageable, Table 9: Vietnam banks NPL ratio and coverage forecasts
coverage over 100% by 2022,
save for VPB 2019 2020E 2021E 2022E
NPL ratio
ACB 0.54% 1.03% 1.17% 1.14%
TCB 1.33% 0.88% 1.14% 1.12%
VCB 0.79% 1.26% 1.31% 1.14%
VPB 3.42% 3.93% 4.12% 3.95%
NPL coverage
ACB 175% 106% 101% 109%
TCB 95% 94% 95% 108%
VCB 179% 173% 158% 168%
VPB 46% 46% 51% 57%
Table 10: Vietnam banks NPL formation forecasts
Gross NPL formation 2019 2020E 2021E 2022E Total 2020-22E

ACB -0.51% 0.71% 0.41% 0.28% 1.41%
TCB -0.18% 1.09% 0.81% 0.57% 2.47%
VCB 0.42% 0.64% 0.85% 0.64% 2.14%
VPB 4.80% 5.49% 4.80% 4.45% 14.74%
Sector 1.13% 1.98% 1.72% 1.48% 5.19%

(65) 6882-2450 14 December 2020
Valuations
Figure 11: Vietnam banks PB ROE
3.50
3.00 VCB
2.50
2021 P/B (x)

2.00
1.50 ACB
1.00 TCB VPB
0.50
-
16.5% 17.0% 17.5% 18.0% 18.5% 19.0% 19.5%
2021 RoE (%)
Figure 12: Vietnam Banks: 5Y P/B Figure 13: Vietnam Banks: 5Y P/E
100% 100%
75% 75%
58%
50% 50% 53%
34%
25% 24% 25% 28% 27%
21%
9%
0% 0%
ACB
TCB
VCB
VPB
ACB
TCB
VCB
VPB
Source: Bloomberg Finance L.P., J.P. Morgan. Source: Bloomberg Finance L.P., J.P. Morgan.
Figure 14: Vietnam Banks: 10Y P/B Figure 15: Vietnam Banks: 10Y P/E
100% 100%
75% 75%
69%
58%
50% 50%
40%
30% 27%
25% 24% 21%
25%
9%
0% 0%
ACB
TCB
VCB
VPB
ACB
TCB
VCB
VPB
Source: Bloomberg Finance L.P., J.P. Morgan. Source: Bloomberg Finance L.P., J.P. Morgan.

(65) 6882-2450 14 December 2020
EPS revisions
Figure 16: ACB: EPS Revisions Figure 17: TCB: EPS Revisions
110 101
105 99
100 97
95 95
93
90 91
85 89
80 87
75 85
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
2021 EPS revision 2022 EPS revision 2021 EPS revision 2022 EPS revision
Source: Bloomberg Finance L.P. Note: Street EPS for 2021/22 rebased to 100. Source: Bloomberg Finance L.P. Note: Street EPS for 2021/22 rebased to 100.
Figure 18: VCB: EPS Revisions Figure 19: VPB: EPS Revisions
105 115
100 105
95
95
90
85
85
80 75
75 65
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
2021 EPS revision 2022 EPS revision 2021 EPS revision 2022 EPS revision
Source: Bloomberg Finance L.P. Note: Street EPS for 2021/22 rebased to 100. Source: Bloomberg Finance L.P. Note: Street EPS for 2021/22 rebased to 100.
10

(65) 6882-2450 14 December 2020
Asia Commercial Bank

Overweight
ACB.HM,ACB VN
Price (14 Dec 20): D28,200.00
Investment Thesis, Valuation and Risks
▲ Price Target (Dec-21): D32,000.00 Asia Commercial Bank (Overweight; Price Target: D32,000.00)
Prior (Dec-21): D30,000.00
Investment Thesis
Vietnam
We hold an OW rating on ACB.
Banks
Harsh Wardhan Modi AC  This bank has navigated asset quality, liquidity and capital limitations to evolve
(65) 6882-2450
into a high-growth and high-return institution.
J.P. Morgan Securities Singapore Private  The key strength of ACB is secured consumer and SME lending, with a focus on
Limited/ J.P. Morgan Securities (Asia Pacific)
Limited/ J.P. Morgan Broking (Hong Kong) business owners. These two segments account for 90% of the loan book.
Limited
 Over 90% loans of ACB’s are secured and loan-to-values are low (~60% of
market value). These provide comfort on provisions. We expect 40bps gross
Style Exposure
credit costs in 2021-22E.
 Bancassurance is supporting non-II, despite lower transaction volumes. Along
with higher treasury income, this drives 25% fee income CAGR from 2020-22E.
 Risk-reward is favourable at 9.0x 2021E PE and 1.51x 2021E PB for 18.6%
2020-22E RoE.
Valuation
Sources for: Style Exposure – J.P. Morgan Quantitative and Our Dec-21 PT of VND32,000 is based on a two-stage DDM. Key assumptions
Derivatives Strategy; all other tables are company data and include normalized RoE of 18.2%, risk-free rate of 5%, cost of capital of 13.1%, and
J.P. Morgan estimates.
terminal growth of 6%.
Risks to Rating and Price Target

Key downside risks to our rating and price target include higher-than-expected credit
costs and NPLs; weaker-than-expected NIM, as the size of the bank limits CoF
improvements; and costs, as the bank invests in operational infrastructure.
11

(65) 6882-2450 14 December 2020
Price Performance Summary Investment Thesis and Valuation

We hold an OW rating on ACB.
 This bank has navigated asset quality, liquidity and

capital limitations to evolve into a high-growth and high-
return institution.
 The key strength of ACB is secured consumer and SME
lending, with a focus on business owners. These two
segments account for 90% of the loan book.
YTD 1m 3m 12m  Over 90% loans of ACB’s are secured and loan-to-values
Abs 60.8% 11.0% 35.6% 60.1% are low (~60% of market value). These provide comfort
Rel 52.0% 1.2% 17.9% 51.3%
on provisions. We expect 40bps gross credit costs in
Company Data 2021-22E.
Shares O/S (mn) 2,162
52-week range (D) 28,950.00-12,384.62
 Bancassurance is supporting non-II, despite lower
Market cap ($ mn) 2,636.34 transaction volumes. Along with higher treasury income,
Exchange rate 23,121.39 this drives 25% fee income CAGR from 2020-22E.
Free float(%) 75.8%
3M - Avg daily vol (mn) 8.63  Risk-reward is favourable at 9.0x 2021E PE and 1.51x
3M - Avg daily val ($ mn) 9.3 2021E PB for 18.6% 2020-22E RoE.
Volatility (90 Day) 27
Index VNINDEX Our Dec-21 PT of VND32,000 is based on a two-stage DDM.
BBG BUY|HOLD|SELL 14|2|0
Key assumptions include normalized RoE of 18.2%, risk-free
Key Metrics (FYE Dec) rate of 5%, cost of capital of 13.1%, and terminal growth of
D in billions FY19A FY20E FY21E FY22E 6%.
Financial Estimates
Net interest income 12,112 13,934 16,011 18,323 Performance Drivers
Non interest income 2,557 3,423 3,212 3,882
Operating expenses (8,308) (8,463) (10,000) (11,600)
Adj. PPOP 6,362 8,895 9,223 10,605
Provision for loan losses 1,154 (1,085) (620) (708)
Adj. PBT 7,516 7,810 8,603 9,897
Adj. net income 5,910 6,137 6,752 7,764
Adj. EPS 2,744.38 2,839.07 3,123.54 3,591.89
BBG EPS 2,824.67 3,093.86 3,591.74 3,940.84
DPS 0.00 0.00 250.00 250.00
Loans 266,165 306,430 349,847 403,508
Deposits 308,129 348,931 394,072 453,042
Total assets 383,514 434,196 492,595 566,463
Margins and Growth
NIM 3.4% 3.5% 3.5% 3.5%
Ratios
Loan/ Deposit ratio 86.4% 87.8% 88.8% 89.1%
NPL / Loans 0.5% 1.0% 1.2% 1.1%
Coverage 175.0% 105.5% 101.1% 109.1%
CET 1 - - - -
Non-int. income/ Income 17.4% 19.7% 16.7% 17.5%
Cost/Income 56.6% 48.8% 52.0% 52.2%
LLP/Loans 0.5% (0.4%) (0.2%) (0.2%)
ROA 1.7% 1.5% 1.5% 1.5%
ROE 24.2% 19.9% 18.2% 17.6%
Valuation
Dividend yield 0.0% 0.0% 0.9% 0.9%
Adj. P/E 10.3 9.9 9.0 7.9
P/ BV 2.2 1.8 1.5 1.3
Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables.
12

(65) 6882-2450 14 December 2020
Valuation
We assume a fair P/B multiple of 1.73x with a normalized RoE of 18.2%, risk-free
rate of 5.0%, cost of capital 13.1%, and terminal growth rate of 6.0%.
Table 11: ACB: Valuation

Core Core
Core Net P/E BVPS P/B Dividend Div Yld Core RoA Core RoE
EPS RoRWA
(VND bn) (VND) (x) (VND) (x) (VND) (%) (%) (%) (%)
2019 6,010 2,744 10.3 12,887 2.19 0 0.0% 1.66% 24.2%
2020E 6,248 2,844 9.9 15,730 1.79 0 0.0% 1.50% 19.9%
2021E 6,883 3,124 9.0 18,664 1.51 250 0.9% 1.46% 18.2%
2022E 7,917 3,592 7.9 22,076 1.28 250 0.9% 1.47% 17.6%
Number of shares (mn) 2,162 Market Cap (VND bn) 60,956
Normalised RoE PB based Valuation PE based Valuation

NIM (on avg. assets) 3.44% Risk-free rate 5.00% Fair PE 9.5x
Non-IR/revenues 18.1% Cost of capital 13.1% 12m Rolling EPS VND3,108
Cost/income 50.9% Long term growth 6.00% PE based Fair Value VND29,547
Operating RoA 2.06% Fair PB 1.73x Implied Value of Growth
LLP/Loans -0.30% PV of Terminal Value VND28,307 12m Rolling EPS VND3,108
Net RoAA 1.45% PV of Dividends VND220 Capitalized Value (VND) VND23,819
Equity/Assets 8.0% PV of today's Fair Value VND28,527 Value of Growth (VND) VND4,381
Normalised RoE 18.2% PB based Fair Value VND32,250 Attributable to Growth 15.5%
13

(65) 6882-2450 14 December 2020
Valuation Sensitivity
Key assumptions are a CoE of 13.1%, RoE of 18.2%, and a terminal growth rate of
6.0%. The tables below reflect our estimates of the sensitivity of fair value to
changes in these variables.
Table 12: Valuation Sensitivity: CoE vs. Terminal Growth

COST OF EQUITY
11.1% 11.6% 12.1% 12.6% 13.1% 13.6% 14.1% 14.6%
4.00% 36,836 34,568 32,582 30,828 29,267 27,871 26,613 25,475
4.50% 38,242 35,707 33,508 31,582 29,882 28,370 27,016 25,797
TERMINAL GROWTH
5.00% 39,880 37,020 34,566 32,437 30,573 28,927 27,463 26,153

5.50% 41,813 38,550 35,786 33,414 31,356 29,554 27,963 26,548
6.00% 44,128 40,356 37,207 34,539 32,250 30,263 28,524 26,989
6.50% 46,953 42,519 38,884 35,850 33,280 31,074 29,160 27,485
7.00% 50,475 45,158 40,893 37,398 34,480 32,008 29,886 28,046
7.50% 54,990 48,448 43,344 39,252 35,896 33,096 30,723 28,687
Table 13: Valuation Sensitivity: RoE vs. Terminal Growth
RETURN ON EQUITY
16.7% 17.2% 17.7% 18.2% 18.7% 19.2% 19.7% 20.2%
4.00% 26,200 27,222 28,245 29,267 30,290 31,312 32,335 33,357
4.50% 26,635 27,718 28,800 29,882 30,964 32,047 33,129 34,211
TERMINAL GROWTH
5.00% 27,125 28,274 29,424 30,573 31,723 32,872 34,022 35,171

5.50% 27,679 28,905 30,130 31,356 32,582 33,807 35,033 36,259
6.00% 28,312 29,624 30,937 32,250 33,562 34,875 36,187 37,500
6.50% 29,041 30,454 31,867 33,280 34,692 36,105 37,518 38,931
7.00% 29,891 31,421 32,950 34,480 36,009 37,539 39,068 40,598
7.50% 30,894 32,562 34,229 35,896 37,564 39,231 40,898 42,566
Table 14: Valuation Sensitivity: CoE vs. RoE
COST OF EQUITY
11.1% 11.6% 12.1% 12.6% 13.1% 13.6% 14.1% 14.6%
16.7% 38,728 35,420 32,659 30,319 28,312 26,570 25,045 23,699
17.2% 40,528 37,065 34,175 31,726 29,624 27,801 26,205 24,795
RETURN ON EQUITY
17.7% 42,328 38,711 35,691 33,132 30,937 29,032 27,365 25,892

18.2% 44,128 40,356 37,207 34,539 32,250 30,263 28,524 26,989
18.7% 45,928 42,001 38,723 35,945 33,562 31,495 29,684 28,085
19.2% 47,728 43,646 40,239 37,352 34,875 32,726 30,844 29,182
19.7% 49,528 45,291 41,755 38,759 36,187 33,957 32,003 30,279
20.2% 51,328 46,937 43,271 40,165 37,500 35,188 33,163 31,375
14

(65) 6882-2450 14 December 2020
Annual Forecasts
Table 15: ACB: Annual P&L
In VND bn 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Interest Income 13,703 14,082 16,448 20,320 24,015 28,318 31,643 35,575 40,761
Interest Expense (8,937) (8,198) (9,556) (11,862) (13,652) (16,205) (17,709) (19,564) (22,438)
Net Interest Income 4,766 5,884 6,892 8,458 10,363 12,112 13,934 16,011 18,323
Non-Interest Income 1,101 189 591 2,612 1,905 2,557 3,423 3,212 3,882
Net Fee income 694 745 944 1,188 1,498 1,896 1,802 2,252 2,815
Trading income 427 (672) (584) 865 332 560 1,531 851 936
Other operating income (20) 116 231 558 76 101 91 109 131
Total Revenues 5,867 6,072 7,483 11,070 12,268 14,670 17,358 19,223 22,205
Costs (3,824) (4,022) (4,678) (6,217) (6,712) (8,308) (8,463) (10,000) (11,600)
PPOP 2,043 2,051 2,805 4,852 5,556 6,362 8,895 9,223 10,605
Loan loss provisions (827) (737) (1,138) (2,196) 833 1,154 (1,085) (620) (708)
Pre-Tax 1,215 1,314 1,667 2,656 6,389 7,516 7,810 8,603 9,897
Tax (264) (286) (342) (538) (1,252) (1,506) (1,562) (1,721) (1,979)
Net income 952 1,028 1,325 2,118 5,137 6,010 6,248 6,883 7,917
Attributable profit 932 1,018 1,275 1,968 4,987 5,910 6,137 6,752 7,764
Table 16: ACB: Annual DuPont
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

NIM (% of avg. IEA) 3.00% 3.09% 3.17% 3.27% 3.38% 3.40% 3.48% 3.51% 3.51%
IEA/Assets 91.9% 100.0% 100.0% 99.7% 100.1% 99.9% 98.0% 98.3% 98.5%
Margins (% of avg. Assets) 2.75% 3.09% 3.17% 3.27% 3.38% 3.40% 3.41% 3.46% 3.46%
Non-IR/Avg. Assets 0.64% 0.10% 0.27% 1.01% 0.62% 0.72% 0.84% 0.69% 0.73%
Revenue/Assets 3.39% 3.19% 3.44% 4.27% 4.00% 4.12% 4.25% 4.15% 4.19%
Cost/Income 65.2% 66.2% 62.5% 56.2% 54.7% 56.6% 48.8% 52.0% 52.2%
C/Assets 2.21% 2.11% 2.15% 2.40% 2.19% 2.33% 2.07% 2.16% 2.19%
Pre-Provision ROA 1.18% 1.08% 1.29% 1.87% 1.81% 1.78% 2.18% 1.99% 2.00%
LLP/Loans -0.74% -0.59% -0.76% -1.21% 0.39% 0.46% -0.38% -0.19% -0.19%
Loan/Assets 64.56% 66.04% 68.66% 69.87% 69.92% 70.03% 70.75% 71.63% 72.01%
Other Income/Assets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Operating ROA 0.70% 0.69% 0.77% 1.03% 2.08% 2.11% 1.91% 1.86% 1.87%
Pre-Tax ROA 0.70% 0.69% 0.77% 1.03% 2.08% 2.11% 1.91% 1.86% 1.87%
Tax Rate -21.7% -21.8% -20.5% -20.3% -19.6% -20.0% -20.0% -20.0% -20.0%
Minorities & Outside Int. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
ROA 0.54% 0.53% 0.59% 0.76% 1.63% 1.66% 1.50% 1.46% 1.47%
Equity/Assets 7.19% 6.61% 6.17% 5.81% 6.04% 6.84% 7.55% 8.02% 8.32%
ROE 7.5% 8.1% 9.5% 13.1% 26.9% 24.2% 19.9% 18.2% 17.6%
15

(65) 6882-2450 14 December 2020
Quarterly Forecasts
Table 17: ACB: Quarterly P&L
In VND bn 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20E 1Q21E 2Q21E 3Q21E 4Q21E
Net Interest Income 2,857 2,903 3,023 3,330 3,419 3,112 3,635 3,768 3,835 3,920 4,047 4,210
Non-Interest Income 509 580 758 711 893 969 791 769 754 786 845 827
Net Fee income 371 520 519 486 371 427 492 513 523 549 604 576
Trading income 125 38 206 191 506 537 248 239 205 210 214 221
Other operating income 12 22 33 34 16 5 52 17 26 27 27 29
Total Revenues 3,365 3,483 3,781 4,040 4,313 4,081 4,426 4,537 4,589 4,706 4,892 5,036
Costs (1,799) (1,922) (1,844) (2,743) (2,361) (1,768) (1,732) (2,603) (2,556) (2,374) (2,376) (2,694)
PPOP 1,566 1,561 1,937 1,297 1,952 2,313 2,694 1,935 2,033 2,331 2,517 2,342
Loan loss provisions 141 354 1 657 (27) (419) (103) (536) (155) (158) (163) (144)
Pre-Tax 1,707 1,915 1,939 1,955 1,925 1,895 2,592 1,399 1,878 2,173 2,354 2,198
Tax (341) (383) (390) (393) (388) (373) (517) (284) (376) (435) (471) (440)
Net income 1,366 1,533 1,549 1,562 1,537 1,522 2,075 1,115 1,502 1,739 1,883 1,759
Attributable profit 1,366 1,533 1,549 1,562 1,537 1,522 2,075 1,115 1,502 1,739 1,883 1,759
Table 18: ACB: Quarterly DuPont
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20E 1Q21E 2Q21E 3Q21E 4Q21E
NIM (% of avg. IEA) 3.43% 3.45% 3.42% 3.56% 3.48% 3.11% 3.40% 3.45% 3.40% 3.38% 3.40% 3.40%
IEA/Assets 100.2% 98.0% 99.8% 102.7% 101.8% 102.1% 105.0% 105.0% 104.7% 104.5% 104.3% 104.6%
Margins (% of avg. Assets) 3.44% 3.38% 3.41% 3.66% 3.55% 3.17% 3.57% 3.62% 3.55% 3.53% 3.55% 3.56%
Non-IR/Avg. Assets 0.61% 0.68% 0.86% 0.78% 0.93% 0.99% 0.78% 0.74% 0.70% 0.71% 0.74% 0.70%
Revenue/Assets 4.05% 4.06% 4.27% 4.44% 4.48% 4.16% 4.34% 4.36% 4.25% 4.24% 4.29% 4.26%
Cost/Income 53.5% 55.2% 48.8% 67.9% 54.7% 43.3% 39.1% 57.4% 55.7% 50.5% 48.6% 53.5%
C/Assets 2.16% 2.24% 2.08% 3.01% 2.45% 1.80% 1.70% 2.50% 2.37% 2.14% 2.08% 2.28%
Pre-Provision ROA 1.88% 1.82% 2.19% 1.42% 2.03% 2.36% 2.64% 1.86% 1.88% 2.10% 2.21% 1.98%
LLP/Loans 0.24% 0.58% 0.00% 1.02% -0.04% -0.60% -0.14% -0.72% -0.20% -0.20% -0.20% -0.17%
Loan/Assets 70.34% 71.07% 71.46% 70.97% 70.50% 71.23% 71.26% 71.29% 71.33% 71.54% 71.65% 71.74%
Other Income/Assets 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Operating ROA 2.05% 2.23% 2.19% 2.15% 2.00% 1.93% 2.54% 1.34% 1.74% 1.96% 2.06% 1.86%
Pre-Tax ROA 2.05% 2.23% 2.19% 2.15% 2.00% 1.93% 2.54% 1.34% 1.74% 1.96% 2.06% 1.86%
Tax Rate -20.0% -20.0% -20.1% -20.1% -20.1% -19.7% -19.9% -20.3% -20.0% -20.0% -20.0% -20.0%
Minorities & Outside Int. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
ROA 1.64% 1.79% 1.75% 1.72% 1.60% 1.55% 2.04% 1.07% 1.39% 1.57% 1.65% 1.49%
Equity/Assets 6.53% 6.73% 6.94% 7.29% 7.42% 7.68% 7.82% 8.03% 8.05% 8.20% 8.37% 8.39%
ROE 25.2% 26.5% 25.2% 23.5% 21.5% 20.2% 26.0% 13.3% 17.3% 19.1% 19.7% 17.7%
16

(65) 6882-2450 14 December 2020
Balance sheet Structure

Table 19: ACB: Common Size Statement
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

ASSETS
Loans 63.9% 66.4% 69.2% 69.2% 69.2% 69.4% 70.6% 71.0% 71.2%
Other IEAs 29.0% 28.1% 26.1% 26.8% 27.4% 27.7% 26.9% 26.6% 26.5%
Other Assets 7.1% 5.5% 4.7% 4.0% 3.4% 2.9% 2.5% 2.4% 2.3%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100% 100%
LIABILITIES
Deposits 88.0% 87.9% 89.4% 89.2% 88.2% 84.7% 83.9% 83.4% 83.2%
Other IBLs 3.3% 1.7% 3.0% 3.5% 3.6% 6.1% 5.9% 6.0% 6.0%
Other Liabilities 1.8% 4.0% 1.5% 1.6% 1.8% 1.9% 2.4% 2.4% 2.4%
Equity 6.9% 6.3% 6.0% 5.6% 6.4% 7.2% 7.8% 8.2% 8.4%
Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100% 100%
Source: Company reports and J.P. Morgan estimates.
Table 20: ACB: Y/Y Growth
YoY Growth 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
ASSETS
Loans 8.6% 16.6% 20.8% 21.7% 15.9% 16.7% 15.1% 14.2% 15.3%
Other IEAs 9.5% 8.5% 7.9% 25.0% 18.4% 17.7% 10.1% 12.0% 14.6%
Other Assets -4.4% -13.0% -0.3% 2.8% -3.0% 0.5% -2.8% 8.9% 9.2%
Total Assets 7.8% 12.2% 16.0% 21.7% 15.8% 16.5% 13.2% 13.5% 15.0%
LIABILITIES
Deposits 8.3% 12.1% 17.9% 21.4% 14.5% 11.9% 12.0% 12.8% 14.8%
Other IBLs 9.7% -43.0% 108.6% 41.7% 17.4% 97.8% 10.0% 15.0% 15.0%
Other Liabilities 16.2% 153.5% -55.5% 26.4% 33.7% 21.8% 40.0% 15.0% 12.0%
Equity -0.9% 3.1% 10.0% 14.0% 31.1% 32.0% 22.5% 18.7% 18.3%
Total Liabilities 7.8% 12.2% 16.0% 21.7% 15.8% 16.5% 13.2% 13.5% 15.0%
Figure 20: ACB: LDR

95%
90%
85%
80%
75%
70%
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
17

(65) 6882-2450 14 December 2020
P&L Sensitivity
Figure 21: Impact of 5% change in revenue
14.0% 12.9%
12.0%
9.4%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
PPoP EPS
Figure 22: Impact of 10bps change in NIM

8.0%
6.7%
7.0%
6.0%
4.9%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
PPoP EPS
Figure 23: Impact of 10bps change in credit costs

6.0%
5.2%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
0.0%
PPoP EPS
18

(65) 6882-2450 14 December 2020
Key Metrics
Figure 24: Return on Equity (%) Figure 25: Return on Assets (%)
30% 1.8%
25% 1.5%
20% 1.2%
15% 0.9%
10% 0.6%
5% 0.3%
0% 0.0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Source: Company reports and J.P. Morgan estimates. Source: Company reports and J.P. Morgan estimates.
Figure 26: Operating Return on Assets (%) Figure 27: Net Interest Margin (%)
2.50% 3.6%
2.25%
3.5%
2.00%
1.75% 3.4%
1.50% 3.3%
1.25%
1.00% 3.2%
0.75% 3.1%
0.50%
3.0%
0.25%
0.00% 2.9%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Figure 28: Credit Costs (%) Figure 29: Loan Growth (%)
-1.4% 23.0%
-1.2%
-1.0% 19.0%
-0.8%
-0.6% 15.0%
-0.4%
-0.2% 11.0%
0.0%
0.2% 7.0%
0.4%
0.6% 3.0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
19

(65) 6882-2450 14 December 2020
Asia Commercial Bank: Summary of Financials

Income Statement FY18A FY19A FY20E FY21E FY22E Balance Sheet FY18A FY19A FY20E FY21E FY22E
Interest income 24,015 28,318 31,643 35,575 40,761 Cash and cash equivalents 0 0 0 0 0
Interest expense (13,652) (16,205) (17,709) (19,564) (22,438) Deposits with banks 35,582 47,200 53,207 60,849 72,954
Net interest income 10,363 12,112 13,934 16,011 18,323 Net loans 227,983 266,165 306,430 349,847 403,508
Non interest income 1,905 2,557 3,423 3,212 3,882 PP&E 3,233 3,770 3,823 4,091 4,410
o/w Fee income 1,498 1,896 1,802 2,252 2,815 Net intangibles 0 0 0 0 0
o/w Trading income 332 560 1,531 851 936 LT investments 54,714 59,039 63,762 70,139 77,153
Net revenues 12,268 14,670 17,358 19,223 22,205 Other assets 7,820 7,340 6,973 7,671 8,438
Non interest expense (6,712) (8,308) (8,463) (10,000) (11,600) Total assets 329,333 383,514 434,196 492,595 566,463
o/w Employee costs 3,221 3,763 4,177 4,929 5,767 Interest earning assets 320,824 374,940 426,772 485,003 558,696
Pre-Prov. Profits 5,556 6,362 8,895 9,223 10,605
Provisions 833 1,154 (1,085) (620) (708) Deposits 269,999 308,129 348,931 394,072 453,042
Adj. PBT 6,389 7,516 7,810 8,603 9,897 Borrowings 32,243 40,236 40,909 46,271 52,363
Income taxes (1,252) (1,506) (1,562) (1,721) (1,979) Other liabilities (263,925) (300,732) (338,575) (382,163) (439,704)
Minority interest 0 0 0 0 0 Total liabilities 308,315 355,762 400,195 452,253 518,743
Adj. Net profit 4,987 5,910 6,137 6,752 7,764 Shareholder equity 21,018 27,753 34,000 40,343 47,720
Minority interests 0 0 0 0 0
PPOP per share 2,635.95 2,954.30 4,122.59 4,266.82 4,906.03 Total liabilities and Shareholder equity 329,333 383,514 434,196 492,595 566,463
Reported EPS 2,366.10 2,744.38 2,839.07 3,123.54 3,591.89 Interest bearing liabilities 302,242 348,365 389,840 440,344 505,405
Adj. EPS 2,366.10 2,744.38 2,839.07 3,123.54 3,591.89
Book Value Per Share 9,971.92 12,887.35 15,729.55 18,663.68 22,076.46
DPS 0.00 0.00 0.00 250.00 250.00 Tangible Book Value Per Share 9,971.92 12,887.35 15,729.55 18,663.68 22,076.46
Diluted shares outstanding 2,108 2,153 2,162 2,162 2,162
Balance Sheet Gearing FY18A FY19A FY20E FY21E FY22E Asset Quality/Capital FY18A FY19A FY20E FY21E FY22E
Loans/Deposits 84.4% 86.4% 87.8% 88.8% 89.1% Loan loss reserves/Loans (1.1%) (0.9%) (1.1%) (1.2%) (1.2%)
Investment/Assets 17.7% 16.0% 15.0% 14.4% 13.9% NPLs/Loans 0.7% 0.5% 1.0% 1.2% 1.1%
Loan/Assets 69.9% 70.0% 70.7% 71.6% 72.0% Loan loss reserves/NPLs 143.2% 162.6% 127.2% 103.0% 105.3%
Customer deposits/Liabilities 87.6% 86.6% 87.2% 87.1% 87.3% NPL y/y growth 20.5% (13.5%) 120.5% 29.1% 12.9%
LT debt/Liabilities 9.5% 10.9% 10.7% 10.2% 10.2% Tier 1 ratio - - - - -
CAR 10.1% 10.9% 10.7% 11.1% 11.2%
Ratio Analysis (%) FY18A FY19A FY20E FY21E FY22E Ratio Analysis (%) FY18A FY19A FY20E FY21E FY22E
Net interest margin 3.4% 3.4% 3.5% 3.5% 3.5% Return on equity (ROE) 26.9% 24.2% 19.9% 18.2% 17.6%
Non interest income/Net revenue 15.5% 17.4% 19.7% 16.7% 17.5% Return on assets (ROA) 1.6% 1.7% 1.5% 1.5% 1.5%
Non interest income/Avg. Assets 0.6% 0.7% 0.8% 0.7% 0.7% Operating ROA 2.1% 2.1% 1.9% 1.9% 1.9%
Efficiency ratio 54.7% 56.6% 48.8% 52.0% 52.2% Pre-Tax ROA 2.1% 2.1% 1.9% 1.9% 1.9%
Leverage ratio 6.8% 7.7% 8.3% 8.7% 9.0% Pre-Provision ROA 1.8% 1.8% 2.2% 2.0% 2.0%
Revenue/Assets 4.0% 4.1% 4.2% 4.1% 4.2% Tax rate 19.6% 20.0% 20.0% 20.0% 20.0%
RORWA - - - - -
Net loans y/y growth 15.9% 16.7% 15.1% 14.2% 15.3%
RWA 0 0 0 0 0 Assets y/y growth 15.8% 16.5% 13.2% 13.5% 15.0%
Avg. RWA 0 0 0 0 0 RWA y/y growth - - - - -
Avg. IEA 307,027 356,240 400,649 455,653 521,581 Deposits y/y growth 11.9% 14.1% 13.2% 12.9% 15.0%
Gross Loans 230,527 268,701 309,803 354,016 408,589 Net interest income y/y growth 22.5% 16.9% 15.0% 14.9% 14.4%
Avg. IBL 282,993 325,303 369,102 415,092 472,874 Revenues y/y growth 10.8% 19.6% 18.3% 10.7% 15.5%
LLR (2,544) (2,536) (3,373) (4,169) (5,082) Adj. EPS y/y growth 153.4% 16.0% 3.5% 10.0% 15.0%
NPLs 1,675 1,449 3,196 4,125 4,656 BVPS y/y growth 31.1% 29.2% 22.1% 18.7% 18.3%
P/BV (x) 2.8 2.2 1.8 1.5 1.3 IE assets/Assets 100.1% 99.9% 98.0% 98.3% 98.5%
Adj. P/E (x) 11.9 10.3 9.9 9.0 7.9 Margins (as % of Avg. Assets) 3.5% 3.5% 3.4% 3.5% 3.5%
Dividend yield 0.0% 0.0% 0.0% 0.9% 0.9% LLP/Loans 0.4% 0.5% (0.4%) (0.2%) (0.2%)
Dividend payout 0.0% 0.0% 0.0% 8.0% 7.0% Equity/Assets 6.0% 6.8% 7.6% 8.0% 8.3%
Cost/Assets 2.2% 2.3% 2.1% 2.2% 2.2%
Assets/Equity 16.6 14.6 13.2 12.5 12.0
Note: D in billions (except per-share data).Fiscal year ends Dec
20

(65) 6882-2450 14 December 2020
Techcombank
Overweight
TCB.HM,TCB VN
Price (14 Dec 20): D26,200.00
▲ Price Target (Dec-21): D45,000.00 Vietnam Technological and Commercial Joint-stock Bank
Prior (Jun-21): D33,000.00 (Overweight; Price Target: D45,000.00)
Vietnam Investment Thesis
Banks
We hold an OW rating on TCB.
(65) 6882-2450  TCB is the most profitable bank in the country on RoA despite having a low
harsh.w.modi@jpmorgan.com deposit market share of 3%.
Limited/ J.P. Morgan Securities (Asia Pacific)  TCB is one of the rare banks across the region that is making money on both
Limited/ J.P. Morgan Broking (Hong Kong) sides of the balance sheet, as well as on fee income, adjusted for all allocated
Limited
costs. This allows for longer-term visibility on returns.
Key Changes (FYE Dec)
 The bank has the distinctive ability to manage its loan growth within a system
Prev Cur that regulates total credit. This is due to a large corporate bond book and a ~58%
Adj. EPS - 20E (D) 2,744.18 3,196.66
Adj. EPS - 21E (D) 3,315.27 3,828.36 loan/asset ratio. Further, high capital allows for credit quotas in the ~20% range,
in our view.
Style Exposure  TCB's improvement in CASA and non-II strength has led to lowest sensitivity of
EPS to NIM changes among Vientam banks. This cushions the impact of lower
asset yields. We factor in ~95bps average gross credit costs in 2020/21E.
 We expect TCB to be on a self-sustained capital level, given its RoE/growth
combination.
Valuation
Our Dec-21 PT of VND45,000 is based on a two-stage DDM. Key assumptions
Sources for: Style Exposure – J.P. Morgan Quantitative and
Derivatives Strategy; all other tables are company data and
include a normalized RoE of 16.9%, a risk-free rate of 5%, a cost of capital of
J.P. Morgan estimates. 12.2%, and a terminal growth rate of 6.5%.

Key downside risks include higher than expected credit costs and NPLs, mark-to-
market losses on the bond portfolio (due to credit or interest rate risk), devolved
losses on portfolio on-sold to clients, and weaker than expected NIM and fee income.
21

(65) 6882-2450 14 December 2020

We hold an OW rating on TCB.
 TCB is the most profitable bank in the country on RoA
despite having a low deposit market share of 3%.
 TCB is one of the rare banks across the region that is
making money on both sides of the balance sheet, as well
as on fee income, adjusted for all allocated costs. This
allows for longer-term visibility on returns.
 The bank has the distinctive ability to manage its loan
YTD 1m 3m 12m
Abs 8.9% 16.6% 20.4% 13.0%
growth within a system that regulates total credit. This is
Rel 0.1% 6.8% 2.7% 4.2% due to a large corporate bond book and a ~58% loan/asset
ratio. Further, high capital allows for credit quotas in the
Company Data
~20% range, in our view.
Shares O/S (mn) 3,500
52-week range (D) 26,300.00-14,000.00  TCB's improvement in CASA and non-II strength has led
Market cap ($ mn) 3,966.18
to lowest sensitivity of EPS to NIM changes among
Exchange rate 23,121.39
Free float(%) 69.9% Vientam banks. This cushions the impact of lower asset
3M - Avg daily vol (mn) 16.36 yields. We factor in ~95bps average gross credit costs in
3M - Avg daily val ($ mn) 16.4 2020/21E.
Index VNINDEX  We expect TCB to be on a self-sustained capital level,
BBG BUY|HOLD|SELL 14|2|0
given its RoE/growth combination.
Key Metrics (FYE Dec)
Our Dec-21 PT of VND45,000 is based on a two-stage DDM.
D in billions FY19A FY20E FY21E FY22E
Financial Estimates Key assumptions include a normalized RoE of 16.9%, a risk-
Net interest income 14,258 17,935 20,329 23,630 free rate of 5%, a cost of capital of 12.2%, and a terminal
Non interest income 5,730 6,831 8,307 10,065 growth rate of 6.5%
Adj. PPOP 12,675 16,181 18,455 21,487
Provision for loan losses 163 (1,812) (1,248) (1,118) Performance Drivers
Adj. PBT 12,838 14,369 17,207 20,368
Adj. net income 10,043 11,189 13,400 15,860
Adj. EPS 2,871.44 3,196.66 3,828.36 4,531.33
BBG EPS 2,704.10 3,074.71 3,594.44 4,071.62
DPS 0.00 0.00 0.00 0.00
Loans 227,885 256,689 308,596 368,279
Deposits 231,297 262,798 313,503 376,251
Total assets 383,699 421,180 500,382 590,395
Margins and Growth
NIM 4.3% 4.7% 4.7% 4.6%
Ratios
NPL / Loans 1.3% 0.9% 1.1% 1.1%
Coverage 94.8% 94.3% 95.1% 107.6%
CET 1 - - - -
Cost/Income 36.6% 34.7% 35.6% 36.2%
LLP/Loans 0.1% (0.7%) (0.4%) (0.3%)
ROA 2.9% 2.8% 2.9% 2.9%
ROE 17.7% 16.6% 16.8% 16.8%
Valuation
Dividend yield 0.0% 0.0% 0.0% 0.0%
Adj. P/E 9.1 8.2 6.8 5.8
P/ BV 1.5 1.3 1.1 0.9
22

(65) 6882-2450 14 December 2020
Valuation
rate of 5%, cost of capital 12.2%, and terminal growth rate of 6.5%.
Table 21: TCB: Valuation

Core Core
EPS RoRWA
(VND bn) (VND) (x) (VND) (x) (VND) (%) (%) (%) (%)
2018 8,463 2,692 9.4 14,790 1.71 0 0.0% 2.86% 21.5%
2019 10,075 2,871 8.8 17,651 1.43 0 0.0% 2.85% 17.7%
2020E 11,242 3,197 7.9 20,863 1.21 0 0.0% 2.78% 16.6%
2021E 13,462 3,828 6.6 24,709 1.02 0 0.0% 2.91% 16.8%
2022E 15,935 4,531 5.6 29,262 0.86 0 0.0% 2.91% 16.8%

Cost/income 35.5% Long term growth 6.50% PE based Dec-21 Fair Value VND40,937
Equity/Assets 16.7% PV of today's Fair Value VND39,797 Value of Growth (VND) -VND5,790
Normalised RoE 16.9% PB based Dec-21 Fair Value VND44,653 Attributable to Growth -22.9%
23

(65) 6882-2450 14 December 2020

COST OF EQUITY
10.2% 10.7% 11.2% 11.7% 12.2% 12.7% 13.2% 13.7%
4.5% 52,298 48,298 44,896 41,966 39,417 37,178 35,197 33,431
5.0% 55,013 50,415 46,559 43,278 40,453 37,995 35,836 33,926
TERMINAL GROWTH
5.5% 58,306 52,939 48,514 44,802 41,644 38,925 36,559 34,481

6.0% 62,384 56,000 50,844 46,593 43,027 39,993 37,381 35,108
6.5% 67,563 59,790 53,671 48,728 44,653 41,235 38,327 35,823
7.0% 74,361 64,604 57,170 51,318 46,591 42,694 39,425 36,644
7.5% 83,676 70,922 61,615 54,524 48,942 44,433 40,715 37,597
8.0% 97,226 79,581 67,450 58,597 51,852 46,543 42,254 38,718
RETURN ON EQUITY
15.4% 15.9% 16.4% 16.9% 17.4% 17.9% 18.4% 18.9%
4.5% 34,645 36,236 37,826 39,417 41,007 42,598 44,188 45,779
5.0% 35,350 37,051 38,752 40,453 42,154 43,855 45,556 47,257
TERMINAL GROWTH
5.5% 36,160 37,988 39,816 41,644 43,472 45,300 47,127 48,955

6.0% 37,101 39,076 41,052 43,027 45,002 46,978 48,953 50,928
6.5% 38,207 40,356 42,504 44,653 46,801 48,950 51,098 53,247
7.0% 39,526 41,881 44,236 46,591 48,946 51,301 53,657 56,012
7.5% 41,125 43,730 46,336 48,942 51,548 54,153 56,759 59,365
8.0% 43,105 46,021 48,936 51,852 54,768 57,684 60,600 63,516
COST OF EQUITY
10.2% 10.7% 11.2% 11.7% 12.2% 12.7% 13.2% 13.7%
15.4% 57,810 51,159 45,923 41,694 38,207 35,282 32,794 30,652
15.9% 61,061 54,036 48,506 44,039 40,356 37,266 34,638 32,375
RETURN ON EQUITY
16.4% 64,312 56,913 51,088 46,383 42,504 39,250 36,482 34,099

16.9% 67,563 59,790 53,671 48,728 44,653 41,235 38,327 35,823
17.4% 70,814 62,667 56,253 51,073 46,801 43,219 40,171 37,546
17.9% 74,065 65,544 58,836 53,417 48,950 45,203 42,015 39,270
18.4% 77,316 68,421 61,418 55,762 51,098 47,187 43,859 40,994
18.9% 80,567 71,298 64,000 58,107 53,247 49,171 45,703 42,717
24

(65) 6882-2450 14 December 2020
Annual Forecasts
Table 25: TCB: Annual P&L
In VND bn 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Interest Income 13,030 13,379 15,736 17,595 21,414 25,016 28,716 32,453 38,715
Non-Interest Income 1,081 1,687 3,287 6,422 5,537 5,730 6,831 8,307 10,065
Net Fee income 1,024 1,272 1,956 3,937 3,273 3,253 4,229 5,287 6,450
Trading income 184 (41) 846 1,531 1,159 1,746 1,652 1,900 2,270
Other operating income (127) 456 485 954 1,106 731 950 1,121 1,345
Total Revenues 6,953 8,901 11,429 15,352 16,927 19,988 24,766 28,636 33,695
Costs (3,309) (3,679) (4,175) (4,824) (5,843) (7,313) (8,585) (10,181) (12,208)
PPOP 3,643 5,222 7,254 10,529 11,084 12,675 16,181 18,455 21,487
Loan loss provisions (2,226) (3,185) (3,257) (2,492) (423) 163 (1,812) (1,248) (1,118)
Pre-Tax 1,417 2,037 3,997 8,036 10,661 12,838 14,369 17,207 20,368
Tax (335) (508) (848) (1,591) (2,187) (2,612) (2,874) (3,441) (4,074)
Net income 1,082 1,529 3,149 6,446 8,474 10,226 11,495 13,766 16,295
Profit before MI 1,082 1,529 3,149 6,446 8,474 10,226 11,495 13,766 16,295
MI & EO 0 0 0 0 (11) (151) (254) (304) (360)
Core profit 1,082 1,529 3,149 6,446 8,463 10,075 11,242 13,462 15,935
Attributable profit 1,068 1,504 3,129 6,446 8,443 10,043 11,189 13,400 15,860
Table 26: TCB: Annual DuPont
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

Avg. IEA Yield 8.12% 8.18% 7.97% 7.92% 7.15% 7.52% 7.60% 7.53% 7.54%
Avg. IBL Cost -4.80% -3.75% -3.97% -3.88% -4.07% -3.79% -3.35% -3.31% -3.47%
NIM (% of avg. IEA) 3.66% 4.41% 4.12% 4.02% 3.80% 4.28% 4.75% 4.72% 4.60%
IEA/Assets 95.8% 88.9% 92.4% 88.0% 101.4% 94.5% 93.8% 93.6% 94.2%
Non-IR/Avg. Assets 0.65% 0.92% 1.54% 2.54% 1.88% 1.63% 1.70% 1.80% 1.85%
Revenue/Assets 4.15% 4.84% 5.35% 6.08% 5.73% 5.67% 6.15% 6.21% 6.18%
Cost/Income 47.6% 41.3% 36.5% 31.4% 34.5% 36.6% 34.7% 35.6% 36.2%
C/Assets 1.98% 2.00% 1.95% 1.91% 1.98% 2.08% 2.13% 2.21% 2.24%
LLP/Loans -2.96% -3.31% -2.56% -1.64% -0.26% 0.08% -0.74% -0.44% -0.33%
Loan/Assets 44.98% 52.32% 59.62% 60.12% 54.34% 55.45% 60.83% 61.94% 62.78%
Operating ROA 0.85% 1.11% 1.87% 3.18% 3.61% 3.64% 3.57% 3.73% 3.73%
Pre-Tax ROA 0.85% 1.11% 1.87% 3.18% 3.61% 3.64% 3.57% 3.73% 3.73%
Tax Rate -23.7% -24.9% -21.2% -19.8% -20.5% -20.3% -20.0% -20.0% -20.0%
Minorities & Outside Int. 0.00% 0.00% 0.00% 0.00% 0.00% -0.04% -0.06% -0.07% -0.07%
ROA 0.64% 0.82% 1.46% 2.55% 2.86% 2.85% 2.78% 2.91% 2.91%
25

(65) 6882-2450 14 December 2020
Quarterly Forecasts
Table 27: TCB: Quarterly P&L
Interest Income 6,074 5,793 6,273 6,876 7,004 6,631 7,701 7,380 7,626 7,860 8,247 8,719
Interest Expense (2,643) (2,740) (2,651) (2,724) (2,792) (2,696) (2,553) (2,740) (2,845) (2,960) (3,078) (3,241)
Non-Interest Income 804 1,297 1,543 2,087 1,682 1,692 1,774 1,683 1,685 2,124 2,214 2,284
Net Fee income 498 831 738 1,187 862 1,113 1,145 1,110 1,021 1,327 1,433 1,505
Trading income 158 267 575 746 602 298 377 375 426 487 487 500
Other operating income 148 199 229 154 218 282 252 198 238 310 294 279
Total Revenues 4,234 4,350 5,165 6,239 5,894 5,628 6,922 6,322 6,467 7,024 7,384 7,762
Costs (1,607) (1,574) (1,794) (2,337) (2,138) (1,697) (2,489) (2,261) (2,465) (2,399) (2,645) (2,672)
PPOP 2,627 2,776 3,370 3,903 3,757 3,930 4,433 4,061 4,001 4,625 4,739 5,090
Loan loss provisions (10) 195 (172) 149 (636) (313) (459) (404) (285) (294) (306) (364)
Pre-Tax 2,617 2,971 3,198 4,052 3,121 3,617 3,974 3,658 3,717 4,331 4,433 4,726
Tax (525) (612) (616) (859) (615) (728) (794) (737) (743) (866) (887) (945)
Net income 2,092 2,359 2,582 3,193 2,506 2,889 3,180 2,920 2,973 3,465 3,547 3,781
Profit before MI 2,092 2,359 2,582 3,193 2,506 2,889 3,180 2,920 2,973 3,465 3,547 3,781
MI & EO (9) (24) (28) (90) (50) (72) (81) (50) (40) (40) (40) (184)
Core profit 2,083 2,335 2,554 3,103 2,456 2,817 3,099 2,870 2,933 3,425 3,507 3,597
Table 28: TCB: Quarterly DuPont
NIM (% of avg. IEA) 4.53% 4.10% 4.23% 4.31% 4.72% 4.37% 5.62% 4.91% 4.88% 4.84% 4.89% 4.90%
IEA/Assets 93.6% 86.8% 94.0% 102.6% 92.0% 91.4% 91.9% 91.8% 91.6% 91.8% 91.9% 92.2%
Non-IR/Avg. Assets 0.99% 1.51% 1.69% 2.22% 1.73% 1.72% 1.78% 1.64% 1.58% 1.92% 1.93% 1.88%
Revenue/Assets 5.23% 5.07% 5.67% 6.64% 6.08% 5.72% 6.94% 6.15% 6.05% 6.37% 6.42% 6.40%
Cost/Income 38.0% 36.2% 34.7% 37.5% 36.3% 30.2% 36.0% 35.8% 38.1% 34.2% 35.8% 34.4%
C/Assets 1.99% 1.83% 1.97% 2.49% 2.21% 1.72% 2.50% 2.20% 2.31% 2.17% 2.30% 2.20%
LLP/Loans -0.02% 0.45% -0.35% 0.27% -1.10% -0.54% -0.79% -0.66% -0.43% -0.43% -0.43% -0.48%
Loan/Assets 50.03% 50.86% 53.66% 58.05% 59.68% 58.87% 57.99% 59.51% 61.53% 61.74% 61.96% 62.21%
Operating ROA 3.24% 3.46% 3.51% 4.31% 3.22% 3.67% 3.99% 3.56% 3.48% 3.93% 3.86% 3.89%
Pre-Tax ROA 3.24% 3.46% 3.51% 4.31% 3.22% 3.67% 3.99% 3.56% 3.48% 3.93% 3.86% 3.89%
Tax Rate -20.1% -20.6% -19.3% -21.2% -19.7% -20.1% -20.0% -20.2% -20.0% -20.0% -20.0% -20.0%
Minorities & Outside Int. -0.01% -0.03% -0.03% -0.10% -0.05% -0.07% -0.08% -0.05% -0.04% -0.04% -0.03% -0.15%
ROA 2.57% 2.72% 2.81% 3.30% 2.53% 2.86% 3.11% 2.79% 2.75% 3.10% 3.05% 2.96%
Equity/Assets 16.3% 16.1% 15.8% 16.1% 16.3% 16.8% 17.3% 17.5% 17.5% 17.7% 17.7% 17.5%
ROE 15.8% 16.9% 17.7% 20.5% 15.5% 17.1% 18.0% 15.9% 15.7% 17.6% 17.2% 16.9%
26

(65) 6882-2450 14 December 2020
Balance sheet structure

Table 29: TCB: Common Size Statement
2015 2016 2017 2018 2019 2020E 2021E 2022E

ASSETS
Loans 57.8% 60.0% 59.0% 49.1% 59.4% 60.9% 61.7% 62.4%
Other IEAs 35.3% 34.6% 35.3% 44.5% 34.4% 31.7% 31.5% 31.3%
Other Assets 6.9% 5.5% 5.7% 6.4% 6.2% 7.3% 6.8% 6.4%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100%
LIABILITIES
Deposits 78.3% 80.7% 71.7% 73.7% 70.3% 67.0% 67.7% 68.6%
Other IBLs 11.0% 8.8% 15.8% 6.4% 10.4% 12.4% 12.0% 11.2%
Other Liabilities 2.1% 2.1% 2.4% 3.8% 3.0% 3.2% 3.0% 2.8%
Equity 8.6% 8.3% 10.0% 16.1% 16.2% 17.4% 17.4% 17.4%
Total Liabilities 100% 100% 100% 100% 100% 100% 100% 100%
Table 30: TCB: Y/Y Growth
YoY Growth 2015 2016 2017 2018 2019 2020E 2021E 2022E
ASSETS
Loans 39.9% 27.1% 12.6% -0.9% 44.6% 12.6% 20.2% 19.3%
Other IEAs -16.0% 20.2% 16.9% 50.2% -7.5% 1.1% 18.1% 17.0%
Other Assets -16.9% -3.1% 19.2% 34.5% 15.0% 30.4% 10.2% 10.2%
Total Assets 9.1% 22.6% 14.5% 19.2% 19.5% 9.8% 18.8% 18.0%
LIABILITIES
Deposits 7.7% 26.4% 1.7% 22.3% 14.2% 4.5% 20.0% 19.6%
Other IBLs 17.8% -1.7% 105.5% -51.7% 94.4% 30.0% 15.0% 10.0%
Other Liabilities 18.8% 22.3% 30.8% 86.4% -4.6% 17.0% 10.0% 10.0%
Equity 9.8% 19.0% 37.5% 92.3% 19.9% 18.2% 18.4% 18.4%
Total Liabilities 9.1% 22.6% 14.5% 19.2% 19.5% 9.8% 18.8% 18.0%
Figure 30: TCB: LDR

110%
100%
90%
80%
70%
60%
50%
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
27

(65) 6882-2450 14 December 2020
P&L Sensitivity
10.0% 8.9%
9.0%
8.0%
7.0% 6.2%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
PPoP EPS

4.0%
3.4%
3.5%
3.0%
2.3%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
PPoP EPS

2.5% 2.3%
2.0%
1.5%
1.0%
0.5%
0.0%
0.0%
PPoP EPS
28

(65) 6882-2450 14 December 2020
Key Metrics
30% 3.0%
25% 2.5%
20% 2.0%
15% 1.5%
10% 1.0%
5% 0.5%
0% 0.0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
4.5% 5.0%
4.0% 4.8%
3.5% 4.6%
3.0% 4.4%
4.2%
2.5%
4.0%
2.0%
3.8%
1.5% 3.6%
1.0% 3.4%
0.5% 3.2%
0.0% 3.0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
-3.5% 50%
45%
-3.0%
40%
-2.5% 35%
-2.0% 30%
25%
-1.5%
20%
-1.0% 15%
-0.5% 10%
5%
0.0% 0%
0.5% -5%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
29

(65) 6882-2450 14 December 2020
Techcombank: Summary of Financials

o/w Trading income 1,159 1,746 1,652 1,900 2,270 LT investments 94,097 76,108 91,330 105,030 120,784
Pre-Prov. Profits 11,084 12,675 16,181 18,455 21,487
Provisions (423) 163 (1,812) (1,248) (1,118)
Deposits 201,415 231,297 262,798 313,503 376,251
Adj. PBT 10,661 12,838 14,369 17,207 20,368
Borrowings 55,629 78,727 71,440 85,053 94,814
Income taxes (2,187) (2,612) (2,874) (3,441) (4,074)
Other liabilities (189,251) (219,694) (249,222) (298,571) (359,826)
Minority interest (11) (151) (254) (304) Total liabilities
(360) 269,206 321,627 347,812 413,489 487,491
Adj. Net profit 8,443 10,043 11,189 13,400 15,860
Shareholder equity 51,713 61,781 73,022 86,484 102,419
Adj. EPS 2,691.56 2,871.44 3,196.66 3,828.36 4,531.33
Customer deposits/Liabilities 74.8% 71.9% 75.6% 75.8% 77.2% NPL y/y growth 8.5% 9.8% (26.2%) 57.0% 17.5%
CAR 14.6% 15.5% 16.7% 16.6% 16.6%
RORWA - - - - -
Net loans y/y growth (0.9%) 44.6% 12.6% 20.2% 19.3%
Dividend yield 0.0% 0.0% 0.0% 0.0% 0.0% LLP/Loans (0.3%) 0.1% (0.7%) (0.4%) (0.3%)
Cost/Assets 2.0% 2.1% 2.1% 2.2% 2.2%
Assets/Equity 7.5 6.2 6.0 5.8 5.8
30

(65) 6882-2450 14 December 2020
Vietcombank
Overweight
VCB.HM,VCB VN
Price (14 Dec 20): D99,900.00
▲ Price Target (Dec-21): D110,000.00 Joint Stock Commercial Bank for Foreign Trade of Vietnam
Prior (Jun-21): D95,000.00 (Overweight; Price Target: D110,000.00)
Banks
We hold an OW rating on VCB.
(65) 6882-2450  VCB is one of those rare EM banks that has a large enough market share to
harsh.w.modi@jpmorgan.com benefit from a cheap deposit franchise, solid underwriting to deliver low
J.P. Morgan Securities Singapore Private provisions, and enough of a footprint to grow the consumer business without
Limited/ J.P. Morgan Securities (Asia Pacific)
Limited/ J.P. Morgan Broking (Hong Kong) incurring significant costs. These attributes should lead to consistently high RoE
Limited and EPSg for long periods of time, in our view.
Key Changes (FYE Dec)  The bank has built one of the largest consumer lending books in the country, with
Prev Cur about a 7% market share, as per our estimates. As a proportion of its book, retail
Adj. EPS - 20E (D) 3,860.00 4,345.70 loans have gone to 43% as of 2019 from 14% in 2013. Further shift suggests
Adj. EPS - 21E (D) 4,863.69 5,025.26 upside to margins.
Style Exposure  Asset quality is benign. The bank has built up NPL coverage to 215% or 2.2% of
loans. Low restructured loans at 1.3% of book suggests lower risks vs peers.
 These give clarity on earnings and returns in 2021-22, where we expect 18%
average RoE. Accordingly, we expect the stock's premium valuations to be
sustained.
Valuation
Our Dec-21 PT of VND110,000 is based on a two-stage DDM. Key assumptions
Sources for: Style Exposure – J.P. Morgan Quantitative and include a normalized RoE of 18.8%, a risk-free rate of 5%, a cost of capital of
Derivatives Strategy; all other tables are company data and 10.1%, and a terminal growth rate of 6.5%.

Asset quality expectations for VCB are rather benign; negative surprises due to
concentration/large corporate exposures are a risk. Further extension of interest rate
relief programs could risk margins in the near term, while slower-than-expected mix
shift could imply lower margins in 2022. Weaker-than-expected non-II and higher-
than-expected costs are also key risks to watch.
31

(65) 6882-2450 14 December 2020

We hold an OW rating on VCB.
 VCB is one of those rare EM banks that has a large
enough market share to benefit from a cheap deposit
franchise, solid underwriting to deliver low provisions,
and enough of a footprint to grow the consumer business
without incurring significant costs. These attributes
should lead to consistently high RoE and EPSg for long
periods of time, in our view.
YTD 1m 3m 12m  The bank has built one of the largest consumer lending
Abs 7.8% 14.5% 18.1% 13.2% books in the country, with about a 7% market share, as
Rel -1.0% 4.7% 0.4% 4.4%
per our estimates. As a proportion of its book, retail loans
Company Data have gone to 43% as of 2019 from 14% in 2013. Further
Shares O/S (mn) 3,709 shift suggests upside to margins.
52-week range (D) 99,900.00-56,600.00
Market cap ($ mn) 16,024.85  Asset quality is benign. The bank has built up NPL
Exchange rate 23,121.39 coverage to 215% or 2.2% of loans. Low restructured
Free float(%) 25.2% loans at 1.3% of book suggests lower risks vs. peers.
3M - Avg daily vol (mn) 0.98
3M - Avg daily val ($ mn) 3.7  These give clarity on earnings and returns in 2021-22,
Index VNINDEX where we expect 18% average RoE. Accordingly, we
BBG BUY|HOLD|SELL 5|12|0 expect the stock's premium valuations to sustain.
Key Metrics (FYE Dec) Our Dec-21 PT of VND110,000 is based on a two-stage
D in billions FY19A FY20E FY21E FY22E DDM. Key assumptions include a normalized RoE of 18.8%,
Financial Estimates a risk-free rate of 5%, a cost of capital of 10.1%, and a
Net interest income 34,577 34,982 40,334 48,962
terminal growth rate of 6.5%.
Adj. PPOP 26,733 28,438 32,304 39,714 Performance Drivers
Provision for loan losses (3,611) (6,084) (5,087) (5,528)
Adj. PBT 23,122 22,354 27,217 34,186
Adj. net income 16,583 16,118 19,420 24,617
Adj. EPS 4,480.98 4,345.70 5,025.26 6,370.06
BBG EPS 4,468.59 4,342.02 5,145.97 6,462.16
DPS 800.00 800.00 800.00 800.00
Loans 724,290 792,032 942,221 1,129,181
Deposits 928,451 1,008,442 1,179,280 1,395,748
Total assets 1,222,719 1,232,152 1,446,227 1,697,290
Margins and Growth
NIM 3.3% 3.1% 3.2% 3.3%
Ratios
NPL / Loans 0.8% 1.3% 1.3% 1.1%
Coverage 179.5% 173.5% 157.5% 167.6%
CET 1 - - - -
Cost/Income 37.2% 35.9% 36.3% 35.1%
LLP/Loans (0.5%) (0.8%) (0.6%) (0.5%)
ROA 1.4% 1.3% 1.5% 1.6%
ROE 23.2% 18.4% 17.8% 18.2%
Valuation
Dividend yield 0.8% 0.8% 0.8% 0.8%
Adj. P/E 22.3 23.0 19.9 15.7
P/ BV 4.6 3.9 3.1 2.6
32

(65) 6882-2450 14 December 2020
Valuation
Table 31: VCB: Valuation

Core
EPS
(VND bn) (VND) (x) (VND) (x) (VND) (%) (%) (%)
2019 18,511 4,481 21.7 21,785 4.46 800 0.8% 1.44% 23.2%
2020E 17,869 4,346 22.4 25,331 3.84 800 0.8% 1.31% 18.4%
2021E 21,756 5,128 19.0 32,160 3.02 800 0.8% 1.45% 17.8%
2022E 27,326 6,370 15.3 37,730 2.58 800 0.8% 1.57% 18.2%

Net RoAA 1.53% PV of Dividends VND1,519 Capitalized Value (VND) VND49,397
Equity/Assets 8.1% PV of today's Fair Value VND100,413 Value of Growth (VND) VND47,803
Normalised RoE 18.8% PB based Fair Value VND110,554 Attributable to Growth 49.2%
33

(65) 6882-2450 14 December 2020

COST OF EQUITY
8.1% 8.6% 9.1% 9.6% 10.1% 10.6% 11.1% 11.6%
4.50% 125,890 111,250 99,794 90,586 83,024 76,702 71,340 66,734
5.00% 140,895 122,116 107,920 96,811 87,882 80,549 74,419 69,219
TERMINAL GROWTH
5.50% 161,670 136,488 118,302 104,554 93,797 85,150 78,048 72,112

6.00% 192,339 156,387 132,034 114,448 101,154 90,751 82,389 75,522
6.50% 242,176 185,761 151,048 127,534 110,554 97,718 87,673 79,600
7.00% 337,320 233,495 179,115 145,653 122,987 106,620 94,247 84,565
7.50% 591,036 324,624 224,724 172,400 140,203 118,394 102,646 90,740
8.00% NM 567,633 311,797 215,863 165,615 134,697 113,754 98,631

RETURN ON
EQUITY
17.3% 17.8% 18.3% 18.8% 19.3% 19.8% 20.3% 20.8%
4.50% 74,507 77,346 80,185 83,024 85,863 88,702 91,541 94,380
5.00% 78,530 81,647 84,765 87,882 90,999 94,117 97,234 100,351
TERMINAL GROWTH
5.50% 83,428 86,884 90,340 93,797 97,253 100,709 104,165 107,621

6.00% 89,521 93,398 97,276 101,154 105,031 108,909 112,786 116,664
6.50% 97,306 101,722 106,138 110,554 114,970 119,387 123,803 128,219
7.00% 107,602 112,731 117,859 122,987 128,116 133,244 138,373 143,501
7.50% 121,859 127,973 134,088 140,203 146,317 152,432 158,547 164,661
8.00% 142,904 150,474 158,045 165,615 173,186 180,757 188,327 195,898
COST OF EQUITY
8.1% 8.6% 9.1% 9.6% 10.1% 10.6% 11.1% 11.6%
17.3% 212,909 163,359 132,870 112,219 97,306 86,032 77,211 70,121
17.8% 222,665 170,827 138,929 117,324 101,722 89,927 80,698 73,281
RETURN ON EQUITY
18.3% 232,420 178,294 144,988 122,429 106,138 93,823 84,186 76,440

18.8% 242,176 185,761 151,048 127,534 110,554 97,718 87,673 79,600
19.3% 251,932 193,229 157,107 132,639 114,970 101,613 91,161 82,760
19.8% 261,688 200,696 163,166 137,744 119,387 105,508 94,648 85,920
20.3% 271,444 208,164 169,225 142,850 123,803 109,403 98,136 89,079
20.8% 281,200 215,631 175,284 147,955 128,219 113,299 101,624 92,239
34

(65) 6882-2450 14 December 2020
Annual Forecasts
Table 35: VCB: Annual P&L
In VND bn 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Interest Income 28,222 31,361 37,718 46,159 55,864 67,724 69,485 78,136 93,925
Non-Interest Income 3,856 3,915 4,232 5,283 7,598 7,974 9,406 10,352 12,266
Net Fee income 1,517 1,873 2,107 2,538 3,402 4,307 4,910 5,990 7,308
Trading income 1,764 1,922 2,256 2,499 2,517 3,531 3,793 3,869 4,317
Other operating income 576 119 (132) 246 1,678 135 704 493 641
Total Revenues 15,865 19,368 22,764 27,221 36,006 42,551 44,388 50,686 61,227
Costs (6,850) (8,306) (9,939) (11,866) (13,611) (15,818) (15,950) (18,382) (21,514)
PPOP 9,016 11,061 12,825 15,355 22,395 26,733 28,438 32,304 39,714
Loan loss provisions (3,171) (4,234) (4,247) (4,013) (4,126) (3,611) (6,084) (5,087) (5,528)
Pre-Tax 5,844 6,827 8,578 11,341 18,269 23,122 22,354 27,217 34,186
Tax (1,258) (1,495) (1,683) (2,231) (3,647) (4,596) (4,471) (5,443) (6,837)
Net income 4,586 5,332 6,895 9,111 14,622 18,526 17,883 21,773 27,349
Profit before MI 4,586 5,332 6,895 9,111 14,622 18,526 17,883 21,773 27,349
MI & EO (19) (18) (19) (20) (16) (15) (15) (18) (22)
Profits post bonus fund 3,780 4,324 5,458 7,175 11,955 16,583 16,118 19,420 24,617
Table 36: VCB: Annual DuPont
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

Avg. IEA Yield 5.63% 5.21% 5.37% 5.60% 5.80% 6.37% 6.10% 6.27% 6.41%
Avg. IBL Cost -3.48% -2.79% -2.85% -2.86% -2.81% -3.15% -3.11% -3.16% -3.21%
NIM (% of avg. IEA) 2.39% 2.57% 2.64% 2.66% 2.95% 3.25% 3.07% 3.24% 3.34%
IEA/Assets 95.9% 96.1% 96.0% 90.5% 91.4% 92.6% 92.8% 93.1% 93.3%
Non-IR/Avg. Assets 0.74% 0.63% 0.58% 0.58% 0.72% 0.69% 0.77% 0.77% 0.78%
Revenue/Assets 3.03% 3.10% 3.11% 2.99% 3.41% 3.71% 3.62% 3.78% 3.90%
Cost/Income 43.2% 42.9% 43.7% 43.6% 37.8% 37.2% 35.9% 36.3% 35.1%
C/Assets 1.31% 1.33% 1.36% 1.30% 1.29% 1.38% 1.30% 1.37% 1.37%
LLP/Loans -1.06% -1.19% -1.00% -0.80% -0.70% -0.53% -0.79% -0.57% -0.52%
Loan/Assets 57.14% 56.82% 58.03% 55.08% 55.72% 59.50% 62.91% 66.16% 67.23%
Operating ROA 1.12% 1.09% 1.17% 1.24% 1.73% 2.01% 1.82% 2.03% 2.18%
Pre-Tax ROA 1.12% 1.09% 1.17% 1.24% 1.73% 2.01% 1.82% 2.03% 2.18%
Tax Rate -21.5% -21.9% -19.6% -19.7% -20.0% -19.9% -20.0% -20.0% -20.0%
ROA 0.72% 0.69% 0.75% 0.79% 1.13% 1.44% 1.31% 1.45% 1.57%
35

(65) 6882-2450 14 December 2020
Quarterly Forecasts
Table 37: VCB: Quarterly P&L
Interest Income 16,094 16,709 17,466 17,455 18,104 16,835 17,024 17,522 18,123 18,914 19,779 21,321
Non-Interest Income 2,124 1,927 2,214 1,708 2,293 2,416 2,392 2,306 2,383 2,575 2,697 2,696
Net Fee income 1,069 1,075 1,278 884 1,127 1,156 1,257 1,370 1,370 1,507 1,582 1,531
Trading income 994 718 940 879 1,053 854 1,041 844 903 947 994 1,026
Other operating income 61 133 (4) (54) 113 406 94 92 111 122 122 139
Total Revenues 10,623 10,506 11,073 10,348 11,327 10,493 11,115 11,453 11,896 12,363 12,826 13,601
Costs (4,384) (4,067) (4,182) (3,184) (4,910) (3,118) (4,579) (3,343) (4,904) (4,507) (5,013) (3,959)
PPOP 6,239 6,439 6,891 7,164 6,417 7,375 6,536 8,110 6,992 7,856 7,813 9,642
Loan loss provisions (361) (1,014) (582) (1,654) (1,194) (1,616) (1,553) (1,721) (1,223) (1,261) (1,305) (1,298)
Pre-Tax 5,878 5,425 6,309 5,510 5,223 5,759 4,983 6,389 5,769 6,596 6,508 8,344
Tax (1,167) (1,060) (1,258) (1,111) (1,040) (1,144) (987) (1,300) (1,154) (1,319) (1,302) (1,669)
Net income 4,711 4,365 5,052 4,399 4,183 4,616 3,996 5,089 4,615 5,277 5,206 6,675
Profit before MI 4,711 4,365 5,052 4,399 4,183 4,616 3,996 5,089 4,615 5,277 5,206 6,675
MI & EO (4) (4) (3) (4) (5) (5) (5) 0 0 0 0 (19)
Core profit 4,707 4,361 5,048 4,394 4,178 4,610 3,991 5,090 4,616 5,277 5,207 6,657
Bonus and welfare fund 0 0 0 (1,928) 0 0 0 (1,751) 0 0 0 (2,336)
Table 38: VCB: Quarterly DuPont
NIM (% of avg. IEA) 3.25% 3.23% 3.25% 3.10% 3.06% 3.00% 3.07% 3.16% 3.17% 3.15% 3.13% 3.22%
IEA/Assets 97.5% 96.6% 95.8% 93.8% 99.7% 92.6% 95.6% 95.5% 95.9% 96.0% 96.0% 96.1%
Non-IR/Avg. Assets 0.79% 0.70% 0.78% 0.57% 0.77% 0.83% 0.81% 0.76% 0.76% 0.80% 0.80% 0.76%
Revenue/Assets 3.96% 3.83% 3.89% 3.48% 3.83% 3.60% 3.75% 3.79% 3.81% 3.82% 3.80% 3.86%
Cost/Income 41.3% 38.7% 37.8% 30.8% 43.3% 29.7% 41.2% 29.2% 41.2% 36.5% 39.1% 29.1%
C/Assets 1.63% 1.48% 1.47% 1.07% 1.66% 1.07% 1.54% 1.10% 1.57% 1.39% 1.49% 1.12%
LLP/Loans -0.22% -0.59% -0.33% -0.92% -0.64% -0.85% -0.80% -0.86% -0.60% -0.60% -0.59% -0.56%
Loan/Assets 60.77% 62.32% 61.55% 60.62% 62.92% 65.47% 65.48% 65.83% 65.76% 65.43% 65.36% 66.10%
Operating ROA 2.19% 1.98% 2.21% 1.85% 1.77% 1.98% 1.68% 2.11% 1.85% 2.04% 1.93% 2.37%
Pre-Tax ROA 2.19% 1.98% 2.21% 1.85% 1.77% 1.98% 1.68% 2.11% 1.85% 2.04% 1.93% 2.37%
Tax Rate -19.9% -19.5% -19.9% -20.2% -19.9% -19.9% -19.8% -20.3% -20.0% -20.0% -20.0% -20.0%
Minorities & Outside Int. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% -0.01%
ROA 1.75% 1.59% 1.77% 0.83% 1.41% 1.58% 1.34% 1.10% 1.48% 1.63% 1.54% 1.23%
Equity/Assets 6.29% 6.80% 6.91% 6.81% 7.00% 7.49% 7.71% 7.74% 8.26% 8.90% 8.93% 8.77%
ROE 27.9% 23.4% 25.6% 12.2% 20.2% 21.1% 17.4% 14.2% 17.9% 18.3% 17.3% 14.0%
36

(65) 6882-2450 14 December 2020

Table 39: VCB: Common Size Statement
2015 2016 2017 2018 2019 2020E 2021E 2022E

ASSETS
Loans 56.2% 57.5% 51.7% 57.9% 59.2% 64.3% 65.2% 66.5%
Other IEAs 41.6% 40.4% 46.4% 39.9% 38.4% 33.2% 32.6% 31.5%
Other Assets 2.1% 2.1% 1.9% 2.2% 2.3% 2.5% 2.2% 2.0%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100%
LIABILITIES
Deposits 88.1% 88.6% 90.4% 90.1% 89.3% 87.6% 87.1% 87.5%
Other IBLs 3.4% 3.7% 2.8% 2.1% 2.0% 2.0% 1.8% 1.6%
Equity 6.7% 6.1% 5.1% 5.8% 6.6% 7.6% 8.6% 8.6%
Table 40: VCB: Y/Y Growth
YoY Growth 2015 2016 2017 2018 2019 2020E 2021E 2022E
ASSETS
Loans 19.9% 19.4% 18.2% 16.1% 16.5% 9.4% 19.0% 19.8%
Other IEAs 13.0% 13.4% 50.6% -10.7% 9.7% -12.9% 15.2% 13.3%
Other Assets 17.6% 15.4% 20.7% 20.2% 18.8% 8.1% 4.9% 4.9%
Total Assets 16.9% 16.8% 31.4% 3.7% 13.8% 0.8% 17.4% 17.4%
LIABILITIES
Deposits 16.5% 17.4% 34.1% 3.4% 12.8% -1.2% 16.7% 17.9%
Other IBLs 94.7% 27.9% 0.5% -22.5% 5.3% 5.0% 5.0% 5.0%
Equity 3.9% 6.6% 9.2% 18.3% 30.1% 16.3% 32.3% 17.3%
Figure 40: VCB: LDR

83%
82%
81%
80%
79%
78%
77%
76%
2015 2016 2017 2018 2019 2020E 2021E 2022E
37

(65) 6882-2450 14 December 2020
P&L Sensitivity
14.0% 13.2%
12.0%
10.0%
7.5%
8.0%
6.0%
4.0%
2.0%
0.0%
PPoP EPS

8.0%
7.1%
7.0%
6.0%
5.0%
4.0%
4.0%
3.0%
2.0%
1.0%
0.0%
PPoP EPS

6.0%
5.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
0.0%
PPoP EPS
38

(65) 6882-2450 14 December 2020
Key Metrics
25% 1.6%
1.4%
20%
1.2%
15% 1.0%
0.8%
10% 0.6%
0.4%
5%
0.2%
0% 0.0%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
3.0% 3.4%
2.5% 3.2%
2.0% 3.0%
1.5% 2.8%
1.0% 2.6%
0.5% 2.4%
0.0% 2.2%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
-1.3% 22%
-1.2%
20%
-1.1%
18%
-1.0%
-0.9% 16%
-0.8%
14%
-0.7%
12%
-0.6%
-0.5% 10%
2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
39

(65) 6882-2450 14 December 2020
Vietcombank: Summary of Financials

Net interest income 28,409 34,577 34,982 40,334 48,962 Net loans 621,573 724,290 792,032 942,221 1,129,181
o/w Trading income 2,517 3,531 3,793 3,869 4,317 LT investments 154,427 171,795 176,949 182,258 187,725
Non interest expense (13,611) (15,818) (15,950) (18,382) (21,514) Total assets 1,074,027 1,222,719 1,232,152 1,446,227 1,697,290
o/w Employee costs 7,678 8,669 8,755 10,156 11,781 Interest earning assets 1,060,160 1,204,435 1,218,833 1,433,604 1,685,162
Pre-Prov. Profits 22,395 26,733 28,438 32,304 39,714
Provisions (4,126) (3,611) (6,084) (5,087) (5,528) Deposits 801,929 928,451 1,008,442 1,179,280 1,395,748
Income taxes (3,647) (4,596) (4,471) (5,443) (6,837) Other liabilities (780,707) (902,453) (974,645) (1,143,455) (1,357,057)
Minority interest (16) (15) (15) (18) (22) Total liabilities 1,011,847 1,141,836 1,138,105 1,321,821 1,551,336
PPOP per share 6,224.72 7,223.93 7,667.59 8,530.97 10,276.75 Total liabilities and Shareholder equity 1,074,027 1,222,719 1,232,152 1,446,227 1,697,290
Reported EPS 3,322.85 4,480.98 4,345.70 5,025.26 6,370.06 Interest bearing liabilities 990,625 1,115,838 1,104,308 1,285,996 1,512,645
Adj. EPS 3,322.85 4,480.98 4,345.70 5,025.26 6,370.06
Customer deposits/Liabilities 79.3% 81.3% 88.6% 89.2% 90.0% NPL y/y growth 0.2% (6.7%) 76.0% 23.8% 3.8%
CAR 12.1% 10.4% 10.5% 11.5% 11.3%
RORWA - - - - -
Avg. IEA 963,600 1,063,918 1,138,936 1,246,646 1,465,820 Deposits y/y growth 13.2% 15.8% 8.6% 16.9% 18.4%
Gross Loans 631,867 734,707 809,747 962,137 1,151,171 Net interest income y/y growth 29.5% 21.7% 1.2% 15.3% 21.4%
Avg. IBL 977,855 1,053,232 1,110,073 1,195,152 1,399,321 Revenues y/y growth 32.3% 18.2% 4.3% 14.2% 20.8%
LLR (10,294) (10,417) (17,715) (19,916) (21,991) Adj. EPS y/y growth 66.6% 34.9% (3.0%) 15.6% 26.8%
Dividend yield 0.8% 0.8% 0.8% 0.8% 0.8% LLP/Loans (0.7%) (0.5%) (0.8%) (0.6%) (0.5%)
Cost/Assets 1.3% 1.4% 1.3% 1.4% 1.4%
Assets/Equity 18.4 16.1 14.0 12.3 11.6
40

(65) 6882-2450 14 December 2020
VP Bank
Overweight
VPB.HM,VPB VN
Price (14 Dec 20): D28,700.00
▲ Price Target (Dec-21): D37,000.00 Vietnam Prosperity Joint-Stock Commercial Bank (Overweight;
Prior (Jun-21): D32,000.00 Price Target: D37,000.00)
Banks
We have an OW rating on VP Bank.
(65) 6882-2450
 VP Bank owns the largest consumer finance company in Vietnam, FE Credit,
which is the key driver of industry-high NIM as well as credit costs. Broadly,
Limited/ J.P. Morgan Securities (Asia Pacific) consumer loans comprise almost 60% of the bank’s total loans, and is a core
Limited/ J.P. Morgan Broking (Hong Kong) competitive advantage.
Limited
 SBV’s regulation on 'cash loans' allows the bank to gradually shift away from
Key Changes (FYE Dec)
these loans over the next three years. VPB is managing this regulation through a
Prev Cur shift to credit cards, which is lower yielding but provides higher non-II.
Adj. EPS - 20E (D) 3,281.08 3,836.26
Adj. EPS - 21E (D) 3,800.05 4,451.09  We factor in gross credit costs of ~500bps average in 2020-22E. Yet, we still
expect 18.9% average RoE over the period.
Style Exposure
 Further, progress on FE Credit IPO is a potential upside catalyst.
 We think risk-reward is attractive at current valuations of 1.12x 2021E PB for
18.9% RoE and 6.4x 2020E PE.
Valuation
Our Dec-21 PT of VND37,000 is based on a 2-stage DDM. Key assumptions include
normalized RoE of 18.3%, risk-free rate of 5%, cost of capital 14.8%, and terminal
Sources for: Style Exposure – J.P. Morgan Quantitative and growth rate of 7.0%.
Derivatives Strategy; all other tables are company data and
Downside risks include sharp credit cost increase and larger-than-expected NPLs,
lower-than-expected loan growth, larger-than-expected NIM compression, slower-
than-expected growth of credit cards and negative surprises on costs.
41

(65) 6882-2450 14 December 2020

We have an OW rating on VP Bank.
 VP Bank owns the largest consumer finance company in

Vietnam, FE Credit, which is the key driver of industry-
high NIM as well as credit costs. Broadly, consumer loans
comprise almost 60% of the bank’s total loans, and is a
core competitive advantage.
 SBV’s regulation on 'cash loans' allows the bank to
gradually shift away from these loans over the next three
YTD 1m 3m 12m
Abs 41.5% 19.2% 23.9% 47.0%
years. VPB is managing this regulation through a shift to
Rel 32.7% 9.4% 6.2% 38.2% credit cards, which is lower yielding but provides higher
non-II.
Company Data
Shares O/S (mn) 2,438  We factor in gross credit costs of ~500bps average in
52-week range (D) 29,300.00-16,000.00 2020-22E. Yet, we still expect 18.9% average RoE over
Market cap ($ mn) 3,025.92 the period.
Exchange rate 23,121.39
Free float(%) 73.3%  Further, progress on FE Credit IPO is a potential upside
3M - Avg daily vol (mn) 6.66
3M - Avg daily val ($ mn) 7.1 catalyst.
Index VNINDEX  We think risk-reward is attractive at current valuations of
BBG BUY|HOLD|SELL 11|4|0 1.12x 2021E PB for 18.9% RoE and 6.4x 2020E PE.
Key Metrics (FYE Dec) Our Dec-21 PT of VND37,000 is based on a 2-stage DDM.
D in billions FY19A FY20E FY21E FY22E Key assumptions include normalized RoE of 18.3%, risk-free
Financial Estimates rate of 5%, cost of capital 14.8%, and terminal growth rate of
Net interest income 30,670 31,693 35,839 40,201
7.0%.
Adj. PPOP 22,147 24,152 26,625 29,536 Performance Drivers
Provision for loan losses (11,823) (12,462) (13,061) (14,435)
Adj. PBT 10,324 11,690 13,563 15,101
Adj. net income 8,260 9,352 10,851 12,081
Adj. EPS 3,376.24 3,836.26 4,451.09 4,955.62
BBG EPS 3,203.83 3,554.08 4,146.34 4,820.23
DPS 0.00 0.00 0.00 0.00
Loans 253,100 284,303 325,083 371,755
Deposits 213,950 244,383 281,068 321,159
Total assets 377,204 420,609 480,913 546,826
Margins and Growth
NIM 9.7% 9.4% 9.4% 9.2%
Ratios
NPL / Loans 3.4% 3.9% 4.1% 3.9%
Coverage 46.4% 46.2% 51.3% 56.8%
CET 1 - - - -
Cost/Income 35.8% 33.0% 34.6% 36.0%
LLP/Loans (4.9%) (4.6%) (4.2%) (4.1%)
ROA 2.4% 2.3% 2.4% 2.4%
ROE 21.5% 19.9% 19.0% 17.6%
Valuation
Dividend yield 0.0% 0.0% 0.0% 0.0%
Adj. P/E 8.5 7.5 6.4 5.8
P/ BV 1.7 1.4 1.1 0.9
42

(65) 6882-2450 14 December 2020
Valuation
Table 41: VPB: Valuation

Core
EPS
(VND bn) (VND) (x) (VND) (x) (VND) (%) (%) (%)
2019 8,260 3,376 8.4 17,315 1.63 0 0.0% 2.36% 21.5%
2020E 9,352 3,836 7.4 21,151 1.34 0 0.0% 2.34% 19.9%
2021E 10,851 4,451 6.4 25,602 1.11 0 0.0% 2.41% 19.0%
2022E 12,081 4,956 5.7 25,602 1.11 0 0.0% 2.35% 17.6%

Equity/Assets 12.6% PV of today's Fair Value VND31,905 Value of Growth (VND) -VND1,554
Normalised RoE 18.3% PB based Fair Value VND36,627 Attributable to Growth -5.5%
43

(65) 6882-2450 14 December 2020

COST OF EQUITY
12.8% 13.3% 13.8% 14.3% 14.8% 15.3% 15.8% 16.3%
5.00% 42,380 40,003 37,897 36,017 34,329 32,805 31,422 30,161
5.50% 43,575 40,963 38,665 36,628 34,811 33,179 31,705 30,368
TERMINAL GROWTH
6.00% 44,947 42,054 39,532 37,314 35,347 33,593 32,017 30,594

6.50% 46,536 43,305 40,517 38,087 35,949 34,054 32,363 30,844
7.00% 48,399 44,755 41,648 38,965 36,627 34,571 32,748 31,121
7.50% 50,614 46,455 42,957 39,974 37,399 35,154 33,179 31,429
8.00% 53,290 48,476 44,493 41,142 38,283 35,816 33,666 31,774
8.50% 56,588 50,918 46,318 42,511 39,308 36,577 34,219 32,164
RETURN ON EQUITY
16.8% 17.3% 17.8% 18.3% 18.8% 19.3% 19.8% 20.3%
5.00% 30,446 31,741 33,035 34,329 35,623 36,917 38,211 39,506
5.50% 30,720 32,083 33,447 34,811 36,175 37,538 38,902 40,266
TERMINAL GROWTH
6.00% 31,024 32,465 33,906 35,347 36,789 38,230 39,671 41,112

6.50% 31,365 32,893 34,421 35,949 37,477 39,005 40,533 42,061
7.00% 31,749 33,375 35,001 36,627 38,253 39,879 41,505 43,131
7.50% 32,186 33,924 35,661 37,399 39,136 40,873 42,611 44,348
8.00% 32,688 34,553 36,418 38,283 40,148 42,014 43,879 45,744
8.50% 33,269 35,282 37,295 39,308 41,322 43,335 45,348 47,361
COST OF EQUITY
12.8% 13.3% 13.8% 14.3% 14.8% 15.3% 15.8% 16.3%
16.8% 41,953 38,795 36,101 33,776 31,749 29,966 28,386 26,976
17.3% 44,102 40,782 37,950 35,506 33,375 31,501 29,840 28,358
RETURN ON EQUITY
17.8% 46,250 42,769 39,799 37,236 35,001 33,036 31,294 29,739

18.3% 48,399 44,755 41,648 38,965 36,627 34,571 32,748 31,121
18.8% 50,548 46,742 43,496 40,695 38,253 36,105 34,202 32,503
19.3% 52,696 48,729 45,345 42,425 39,879 37,640 35,655 33,884
19.8% 54,845 50,716 47,194 44,155 41,505 39,175 37,109 35,266
20.3% 56,994 52,703 49,043 45,885 43,131 40,709 38,563 36,647
44

(65) 6882-2450 14 December 2020
Annual Forecasts
Table 45: VPB: Annual P&L
In VND bn 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Interest Income 12,404 18,759 25,631 34,133 40,280 49,875 52,181 57,651 65,036
Non-Interest Income 910 1,461 980 3,177 4,292 3,820 4,342 4,855 5,957
Net Fee income 607 885 853 1,462 1,612 2,792 3,238 3,724 4,469
Trading income 371 (218) (376) 360 89 871 1,096 1,044 1,358
Other operating income (68) 795 504 1,355 2,590 157 8 87 130
Total Revenues 6,201 11,815 16,148 23,791 28,994 34,491 36,035 40,694 46,157
Costs (3,683) (5,692) (6,621) (8,758) (10,634) (12,344) (11,884) (14,069) (16,621)
PPOP 2,518 6,122 9,527 15,033 18,360 22,147 24,152 26,625 29,536
Loan loss provisions (909) (3,026) (4,597) (6,903) (9,161) (11,823) (12,462) (13,061) (14,435)
Pre-Tax 1,609 3,096 4,929 8,130 9,199 10,324 11,690 13,563 15,101
Tax (355) (700) (994) (1,689) (1,843) (2,064) (2,338) (2,713) (3,020)
Net income 1,254 2,396 3,935 6,441 7,356 8,260 9,352 10,851 12,081
Profit before MI 1,254 2,396 3,935 6,441 7,356 8,260 9,352 10,851 12,081
MI & EO - - - - - - - - -
Core profit 1,254 2,396 3,935 6,441 7,356 8,260 9,352 10,851 12,081
Table 46: VPB: Annual DuPont
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

Avg. IEA Yield 10.31% 11.79% 13.34% 14.90% 14.67% 15.77% 15.55% 15.09% 14.83%
Avg. IBL Cost -5.59% -5.20% -5.52% -6.14% -6.05% -6.40% -6.05% -5.76% -5.79%
NIM (% of avg. IEA) 4.40% 6.50% 7.90% 9.00% 9.00% 9.70% 9.45% 9.38% 9.17%
IEA/Assets 84.5% 89.1% 90.9% 90.4% 91.3% 90.3% 84.1% 84.7% 85.4%
Non-IR/Avg. Assets 0.64% 0.82% 0.46% 1.25% 1.43% 1.09% 1.09% 1.08% 1.16%
Revenue/Assets 4.36% 6.62% 7.64% 9.39% 9.65% 9.85% 9.03% 9.03% 8.98%
Cost/Income 59.4% 48.2% 41.0% 36.8% 36.7% 35.8% 33.0% 34.6% 36.0%
C/Assets 2.59% 3.19% 3.13% 3.46% 3.54% 3.52% 2.98% 3.12% 3.23%
LLP/Loans -1.39% -3.10% -3.52% -4.22% -4.53% -4.93% -4.56% -4.20% -4.05%
Loan/Assets 45.99% 54.66% 61.87% 64.62% 67.32% 68.40% 68.53% 68.96% 69.32%
Operating ROA 1.13% 1.73% 2.33% 3.21% 3.06% 2.95% 2.93% 3.01% 2.94%
Pre-Tax ROA 1.13% 1.73% 2.33% 3.21% 3.06% 2.95% 2.93% 3.01% 2.94%
Tax Rate -22.1% -22.6% -20.2% -20.8% -20.0% -20.0% -20.0% -20.0% -20.0%
ROA 0.88% 1.26% 1.79% 2.49% 2.45% 2.36% 2.34% 2.41% 2.35%
45

(65) 6882-2450 14 December 2020
Quarterly Forecasts
Table 47: VPB: Quarterly P&L
Interest Income 11,377 12,114 12,969 13,415 13,222 12,907 12,884 13,168 13,560 14,037 14,624 15,429
Non-Interest Income 712 921 1,018 1,169 1,432 677 1,058 1,175 1,178 1,208 1,257 1,213
Net Fee income 521 713 709 849 695 687 941 915 897 924 970 933
Trading income 134 162 264 311 738 20 124 213 260 263 266 255
Other operating income 57 46 45 8 (2) (31) (6) 46 21 21 21 24
Total Revenues 7,737 8,347 8,995 9,411 9,428 8,403 8,942 9,262 9,594 9,901 10,364 10,835
Costs (2,976) (3,044) (3,122) (3,202) (3,283) (2,555) (2,787) (3,259) (3,274) (3,438) (3,593) (3,765)
PPOP 4,762 5,303 5,873 6,209 6,145 5,848 6,155 6,004 6,320 6,463 6,772 7,070
Loan loss provisions (2,979) (2,743) (3,017) (3,084) (3,259) (2,149) (3,343) (3,711) (3,126) (3,204) (3,304) (3,427)
Pre-Tax 1,783 2,560 2,856 3,125 2,886 3,699 2,813 2,292 3,195 3,259 3,467 3,643
Tax (361) (511) (574) (619) (597) (722) (561) (457) (639) (652) (693) (729)
Net income 1,422 2,049 2,283 2,507 2,289 2,976 2,252 1,835 2,556 2,607 2,774 2,914
Profit before MI 1,422 2,049 2,283 2,507 2,289 2,976 2,252 1,835 2,556 2,607 2,774 2,914
MI & EO - - - - - - - - - - - -
Core profit 1,422 2,049 2,283 2,507 2,289 2,976 2,252 1,835 2,556 2,607 2,774 2,914
Table 48: VPB: Quarterly DuPont
NIM (% of avg. IEA) 9.39% 9.08% 9.78% 9.78% 9.08% 8.69% 8.63% 8.64% 8.82% 8.83% 8.96% 9.10%
IEA/Assets 92.7% 97.5% 92.3% 91.7% 91.5% 89.7% 89.8% 89.7% 89.7% 89.9% 90.0% 90.2%
Non-IR contribution 9.21% 11.03% 11.32% 12.42% 15.19% 8.05% 11.83% 12.69% 12.28% 12.20% 12.12% 11.19%
Non-IR/Avg. Assets 0.88% 1.10% 1.15% 1.27% 1.49% 0.68% 1.04% 1.13% 1.11% 1.10% 1.11% 1.03%
Revenue/Assets 9.59% 9.95% 10.18% 10.24% 9.79% 8.48% 8.80% 8.88% 9.02% 9.03% 9.18% 9.24%
Cost/Income 38.5% 36.5% 34.7% 34.0% 34.8% 30.4% 31.2% 35.2% 34.1% 34.7% 34.7% 34.7%
C/Assets 3.69% 3.63% 3.53% 3.48% 3.41% 2.58% 2.74% 3.12% 3.08% 3.14% 3.18% 3.21%
LLP/Loans -5.26% -4.58% -4.81% -4.82% -5.00% -3.22% -4.88% -5.23% -4.27% -4.27% -4.27% -4.24%
Loan/Assets 70.26% 71.42% 70.98% 69.53% 67.62% 67.35% 67.39% 68.01% 68.76% 68.48% 68.55% 68.94%
Operating ROA 2.21% 3.05% 3.23% 3.40% 3.00% 3.73% 2.77% 2.20% 3.00% 2.97% 3.07% 3.11%
Pre-Tax ROA 2.21% 3.05% 3.23% 3.40% 3.00% 3.73% 2.77% 2.20% 3.00% 2.97% 3.07% 3.11%
Tax Rate -20.2% -20.0% -20.1% -19.8% -20.7% -19.5% -20.0% -19.9% -20.0% -20.0% -20.0% -20.0%
Minorities & Outside Int. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
ROA 1.76% 2.44% 2.58% 2.73% 2.38% 3.00% 2.21% 1.76% 2.40% 2.38% 2.46% 2.49%
Equity/Assets 11.0% 11.1% 11.1% 11.0% 11.0% 11.6% 12.0% 11.9% 12.2% 12.3% 12.6% 12.7%
ROE 16.0% 22.0% 23.2% 24.9% 21.6% 25.9% 18.5% 14.8% 19.7% 19.3% 19.5% 19.6%
46

(65) 6882-2450 14 December 2020

Table 49: VPB: Common Size Statement
2015 2016 2017 2018 2019 2020E 2021E 2022E

ASSETS
Loans 59.3% 62.3% 64.6% 67.6% 67.1% 67.6% 67.6% 68.0%
Other IEAs 35.4% 31.7% 29.4% 26.5% 25.6% 25.5% 26.1% 26.2%
Other Assets 5.3% 5.9% 6.0% 6.0% 7.3% 6.9% 6.3% 5.8%
Total Assets 100% 100% 100% 100% 100% 100% 100% 100%
LIABILITIES
Deposits 74.6% 60.5% 50.9% 60.6% 59.9% 59.6% 59.9% 60.1%
Other IBLs 15.7% 28.6% 34.3% 25.4% 25.6% 24.8% 23.9% 23.1%
Equity 6.9% 7.5% 10.7% 10.7% 11.2% 12.3% 13.0% 13.6%
Table 50: VPB: Y/Y Growth
YoY Growth 2015 2016 2017 2018 2019 2020E 2021E 2022E
ASSETS
Loans 48.9% 23.9% 25.9% 21.7% 15.9% 12.3% 14.3% 14.4%
Other IEAs -3.7% 5.8% 12.5% 4.8% 12.7% 11.3% 16.9% 14.1%
Other Assets -30.6% 33.1% 21.9% 16.8% 43.0% 4.7% 4.9% 4.9%
Total Assets 18.8% 18.0% 21.4% 16.4% 16.7% 11.5% 14.3% 13.7%
LIABILITIES
Deposits 16.8% -4.4% 2.2% 38.4% 15.5% 10.8% 15.0% 14.2%
Other IBLs 26.3% 115.2% 45.7% -13.9% 17.7% 8.0% 10.0% 10.0%
Other Liabilities -14.6% 45.2% 44.1% -5.2% 14.7% 16.0% 10.0% 10.0%
Equity 49.1% 28.3% 72.9% 17.0% 21.5% 22.2% 21.0% 19.4%
Figure 50: VPB: LDR

140%
130%
120%
110%
100%
90%
80%
2015 2016 2017 2018 2019 2020E 2021E 2022E
47

(65) 6882-2450 14 December 2020
P&L Sensitivity
20% 18.4%
18%
16%
14%
12%
10%
7.1%
8%
6%
4%
2%
0%
PPoP EPS

4.0% 3.6%
3.5%
3.0%
2.5%
2.0%
1.4%
1.5%
1.0%
0.5%
0.0%
PPoP EPS

3.5% 3.1%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
0.0%
PPoP EPS
48

(65) 6882-2450 14 December 2020
Key Metrics
30% 3.0%
25% 2.5%
20% 2.0%
15% 1.5%
10% 1.0%
5% 0.5%
0% 0.0%
2017 2018 2019 2020E 2021E 2022E 2017 2018 2019 2020E 2021E 2022E
3.3%
9.9%
3.2%
3.2% 9.7%
3.1% 9.5%
3.1%
9.3%
3.0%
9.1%
3.0%
2.9% 8.9%
2.9% 8.7%
2.8%
8.5%
2.8% 2017 2018 2019 2020E 2021E 2022E
2017 2018 2019 2020E 2021E 2022E
-5.0% 28%
-4.9% 26%
-4.8% 24%
-4.7%
22%
-4.6%
20%
-4.5%
18%
-4.4%
-4.3% 16%
-4.2% 14%
-4.1% 12%
-4.0% 10%
2017 2018 2019 2020E 2021E 2022E 2017 2018 2019 2020E 2021E 2022E
49

(65) 6882-2450 14 December 2020
VP Bank: Summary of Financials

o/w Trading income 89 871 1,096 1,044 1,358 LT investments 56,319 70,460 81,029 85,891 91,045
Pre-Prov. Profits 18,360 22,147 24,152 26,625 29,536
Provisions (9,161) (11,823) (12,462) (13,061) (14,435) Deposits 170,851 213,950 244,383 281,068 321,159
Income taxes (1,843) (2,064) (2,338) (2,713) (3,020) Other liabilities (160,161) (201,684) (230,154) (265,417) (303,943)
Minority interest 0 0 0 0 0 Total liabilities 288,541 334,994 369,047 418,500 472,333
Adj. EPS 3,024.41 3,376.24 3,836.26 4,451.09 4,955.62
Customer deposits/Liabilities 59.2% 63.9% 66.2% 67.2% 68.0% NPL y/y growth 25.3% 13.3% 29.2% 20.4% 9.7%
CAR 11.2% 11.1% 11.7% 12.3% 12.8%
RORWA - - - - -
Dividend yield 0.0% 0.0% 0.0% 0.0% 0.0% LLP/Loans (4.5%) (4.9%) (4.6%) (4.2%) (4.1%)
Cost/Assets 3.5% 3.5% 3.0% 3.1% 3.2%
Assets/Equity 9.3 9.1 8.5 7.9 7.5
50

(65) 6882-2450 14 December 2020
Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research
Analysts are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document
individually certifies, with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views
expressed in this report accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and
(2) no part of any of the Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations
or views expressed by the Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if
applicable, they also certify, as per KOFIA requirements, that the Research Analyst’s analysis was made in good faith and that the views
reflect the Research Analyst’s own opinion, without undue influence or intervention.
All authors named within this report are Research Analysts unless otherwise specified. In Europe, Sector Specialists (Sales and Trading)
may be shown on this report as contacts but are not authors of the report or part of the Research Department.
Important Disclosures
 Market Maker/ Liquidity Provider: J.P. Morgan is a market maker and/or liquidity provider in the financial instruments of/related to
Asia Commercial Bank, Techcombank, Vietcombank, VP Bank.
 Client: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients: Asia Commercial Bank,
Techcombank, Vietcombank, VP Bank.
 Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following
entity(ies) as clients, and the services provided were non-investment-banking, securities-related: Asia Commercial Bank, Techcombank,
Vietcombank, VP Bank.
 Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following entity(ies) as clients, and
the services provided were non-securities-related: Asia Commercial Bank, Techcombank, Vietcombank, VP Bank.
 Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services
other than investment banking from Asia Commercial Bank, Techcombank, Vietcombank, VP Bank.
 Debt Position: J.P. Morgan may hold a position in the debt securities of Asia Commercial Bank, Techcombank, Vietcombank, VP
Bank, if any.
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for
compendium reports and all J.P. Morgan–covered companies by visiting https://www.jpmm.com/research/disclosures, calling 1-800-477-
0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request. J.P. Morgan’s Strategy, Technical, and Quantitative
Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-
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Asia Commercial Bank (ACB.HM, ACB VN) Price Chart Date Rating Price (D) Price Target
(D)
46,640 01-Nov-19 OW 18538.46 30,769
OW D23,077
OW D30,000 21-Feb-20 OW 20307.69 32,308
40,810
03-Apr-20 OW 14307.69 17,692
OW D17,692 OW D26,000
12-Jun-20 OW 18846.15 23,077
34,980
24-Jun-20 OW 18461.54 24,615.38
OW D30,769
OW D32,308
OW D24,615.38
29,150 23-Sep-20 OW 22300.00 26,000
Price(D)
20-Nov-20 OW 27200.00 30,000
23,320
17,490
11,660
5,830
0
Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
17 18 18 18 18 19 19 19 19 20 20 20 20
Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Nov 01, 2019. All share prices are as of market close on the previous business day.
51

(65) 6882-2450 14 December 2020
Techcombank (TCB.HM, TCB VN) Price Chart Date Rating Price (D) Price Target
(D)
01-Nov-19 OW 23700.00 40,000
68,768
OW D32,000 24-Feb-20 OW 23100.00 43,000
58,944 03-Apr-20 OW 15500.00 26,000
OW D26,000 12-Jun-20 OW 20900.00 32,000
49,120 23-Sep-20 OW 22350.00 33,000
OW D40,000OW D43,000 OW D33,000
39,296
Price(D)
29,472
19,648
9,824
0
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
18 18 18 19 19 19 19 20 20 20 20
Vietcombank (VCB.HM, VCB VN) Price Chart Date Rating Price (D) Price Target
(D)
166,192 01-Nov-19 OW 87700.00 100,000
N D90,000 03-Apr-20 OW 65000.00 75,000
145,418
27-May-20 OW 82500.00 88,000
OW D88,000
124,644 12-Jun-20 N 88000.00 90,000
22-Jul-20 OW 82500.00 95,000
103,870 OW D100,000 OW D75,000
OW D95,000
Price(D) 83,096
62,322
41,548
20,774
0
17 18 18 18 18 19 19 19 19 20 20 20 20
52

(65) 6882-2450 14 December 2020
VP Bank (VPB.HM, VPB VN) Price Chart Date Rating Price (D) Price Target
(D)
01-Nov-19 N 21500.00 20,000
66,227 OW D30,000 12-Feb-20 OW 25400.00 34,000
03-Apr-20 OW 17250.00 25,000
56,766 OW D25,000
12-Jun-20 OW 23100.00 30,000
23-Sep-20 OW 23400.00 32,000
47,305 N D20,000
OW D34,000 OW D32,000
Price(D) 37,844
28,383
18,922
9,461
0
17 18 18 18 18 19 19 19 19 20 20 20 20
The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
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total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it
does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P.
Morgan’s research website, www.jpmorganmarkets.com.
Coverage Universe: Modi, Harsh Wardhan: AMMB Holdings (AMMB.KL), Asia Commercial Bank (ACB.HM), BDO Unibank
(BDO.PS), Bangkok Bank (BBL.BK), Bank Central Asia (BCA) (BBCA.JK), Bank Negara Indonesia Persero (BBNI.JK), Bank Rakyat
Indonesia (BBRI.JK), Bank of the Philippine Islands (BPI.PS), CIMB Group Holdings (CIMB.KL), DBS Group Holdings (DBSM.SI),
Hong Kong Exchanges & Clearing (0388) (0388.HK), Hong Leong Bank (HLBB.KL), Kasikornbank PCL (KBANK.BK), Krung Thai
Bank (KTB.BK), Maybank (Malayan Banking) (MBBM.KL), Metropolitan Bank (MBT.PS), OCBC Bank (OCBC.SI), PT Bank Mandiri
Tbk. (BMRI.JK), Philippine National Bank (PNB.PS), Public Bank (PUBM.KL), RHB Bank Bhd (RHBC.KL), Security Bank
Corporation (SECB.PS), Siam Commercial Bank (SCB.BK), Singapore Exchange (SGXL.SI), Srisawad Corporation PCL (SAWAD.CK),
TMB Bank PCL (TMB.BK), Techcombank (TCB.HM), Tisco Financial Group PCL (TISCO.BK), United Overseas Bank (UOB)
(UOBH.SI), VP Bank (VPB.HM), Vietcombank (VCB.HM)
J.P. Morgan Equity Research Ratings Distribution, as of October 10, 2020

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage 47% 39% 14%
IB clients* 52% 49% 37%
JPMS Equity Research Coverage 46% 40% 14%
IB clients* 75% 70% 55%
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This information is current as of the end of the most recent calendar quarter.
53

(65) 6882-2450 14 December 2020
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Completed 14 Dec 2020 08:33 PM HKT Disseminated 14 Dec 2020 09:18 PM HKT

Vietnam Banks: The Sector To Own Significant Potential Upside in The Next 12 Months

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Vietnam Banks: The Sector To Own Significant Potential Upside in The Next 12 Months

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Asia Pacific Equity Research

Table 1: Vietnam Banks Valuation

Equity Ratings and Price Targets

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Current account surplus to Figure 2: Vietnam current account % of GDP

Source: CEIC, J.P. Morgan estimates.

EPS growth to accelerate in Table 2: Vietnam banks 2018-22E EPS growth

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Vietnam banks have Figure 3: Asean banks stock price performance

Source: J.P. Morgan estimates, Bloomberg Finance L.P.

Source: Bloomberg Finance L.P.

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Increasing EPS and PTs

Increasing PTs across the sector Table 4: Vietnam banks PT changes

In VND Old PT New PT % change

Table 7: Net credit costs trend from 2019-22E

Net credit costs 2019 2020E 2021E 2022E Total 2020-22E

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FOL is a key driver

Foreign share of trades are Figure 6: Foreign share of shares traded

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Loan growth to accelerate

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Asset quality remains benign

Table 10: Vietnam banks NPL formation forecasts

Gross NPL formation 2019 2020E 2021E 2022E Total 2020-22E

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2021 P/B (x)

Source: J.P. Morgan estimates, Bloomberg Finance L.P.

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Asia Commercial Bank

Risks to Rating and Price Target

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Price Performance Summary Investment Thesis and Valuation

 This bank has navigated asset quality, liquidity and

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Table 11: ACB: Valuation

Number of shares (mn) 2,162 Market Cap (VND bn) 60,956

Normalised RoE PB based Valuation PE based Valuation

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Table 12: Valuation Sensitivity: CoE vs. Terminal Growth

5.00% 39,880 37,020 34,566 32,437 30,573 28,927 27,463 26,153

Table 13: Valuation Sensitivity: RoE vs. Terminal Growth

5.00% 27,125 28,274 29,424 30,573 31,723 32,872 34,022 35,171

Table 14: Valuation Sensitivity: CoE vs. RoE

17.7% 42,328 38,711 35,691 33,132 30,937 29,032 27,365 25,892

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Table 16: ACB: Annual DuPont

2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

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Table 18: ACB: Quarterly DuPont

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Balance sheet Structure

2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

Table 20: ACB: Y/Y Growth

Figure 20: ACB: LDR

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Source: J.P. Morgan estimates.

Figure 22: Impact of 10bps change in NIM

Source: J.P. Morgan estimates.

Figure 23: Impact of 10bps change in credit costs

Source: J.P. Morgan estimates.