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MBB – Tap into digital banking – Update

Company Note 25/03/2022    70

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  • FY21 net profit surged 53.7% yoy to VND12,697bn, on the back of strong credit growth and NIM expansion.
  • We estimate earnings to grow 28.5%/21.8% yoy over FY22-23F base on 20%/17.5% yoy of loan growth and 5.03%/5.11% of NIM.
  • Reiterate Add rating with a higher TP of VND40,800.

Market Price,

Target Price

Dividend Yield

Rating

Sector

VND32,050

VND40,800

0.00%

Add

Financials

Strong all facets
FY21 net interest income (NII) surged 29% yoy driven by 26% yoy of credit growth and net interest margin (NIM) of 5.03%. FY21 non-interest income (non-II) surged 51.5% yoy mainly thanks to 68.1% yoy growth of income from bad-debt recover and 23.7% yoy growth of bancassurance. On the cost side, FY21 CIR dropped down to 33.5% from 38.6% last year, thanks to control effectively in labor cost. FY21 provision expenses increased 31.2% yoy, bringing loan-loss-ratio (LLR) to reach 268% – the second highest among listed bank. Besides that, NPL slid to 0.9% from 1.1% last year, lower 53% than average industry was 1.92% in FY21.

The bank will embark a new phase of growth since 2022
In the analyst meeting on 15 March, Management shared its aim to be among top digital banks by launching the Digital Innovation Lab in Cat Linh street in November 2021 and continue to upgrade App MB and Biz MB. Besides, the bank will promote retail lending, focusing in individual mortgage lending and micro SME lending with CAGR of credit growth reach 17% in FY22-26F. For FY22F, the bank sets plan pre-tax profit increase 26.7% yoy to reach VND20.9tr support by 20% yoy of credit growth, lead to ROE reach 23%. MBB also continues control strict credit quality with NPL less than 1% in FY22.

We estimate earning to grow 28.5%/21.8% yoy over FY22-23F
In FY22-23F, we forecast NII increase 19.9%/18.0% yoy in 20.0%/17.5% yoy of loan growth and 5.03%/5.11% of NIM. We believe that MBB focus on retail lending and improve MB App help the bank increase credit and improve CASA. Non-II grow 16.4%/14.1% yoy thanks the bank accelerates the development of cross-selling, promoting digital products and contribution from subsidiaries. In additional, we believe the provision expenses decrease 5.0%/1.7% than FY21 thanks high provision buffer in previous period. As a result, we project FY22-23F earning to grow 28.5%/21.8% yoy.

We raise our TP to VND40,800 following FY22-24F earnings upgrade
Our new TP is based on the equal weight of residual income valuation (COE: 15.1%; LTG: 3.0%) and a target of 2.0x for FY22F book value. Downside risks include higher-than-expected inflation that might hinder loan growth and higher-than-expected bad debts. An upside risk is stronger growth in fee income higher than our projection.

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