VCB – Strong earnings growth helped improve asset quality – Update

• VCB’s 1H18 pre-tax profit increased 52.6% yoy to VND8tr. This formed 62% of the bank’s FY18F target and 56% of our FY18F forecast.
• Net interest income grew 19.1% yoy on strong loan growth while NIM was flat yoy.
• 1H18 non-interest income exceeded our expectations largely due to one-offs; we expect 2H18 non-interest income to be lower than in 1H18.
• Our Add is intact given strong earnings growth outlook and improving asset quality.
• We maintain our TP of VND79,500, based on an equally-weighted combination of residual income valuation (COE: 13.7%, LTG: 4%) and FY19F P/BV of 4.0x

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