VPB – Growth on track but concerns over investigation into consumer finance operation casting a shadow – Update

• VPB reported a 1Q18 pre-tax profit growth of 36.1%, driven by NIM expansion and strong Non-II growth. 1Q18 net profit was in line at 24.5% of our full-year forecast.
• Loan growth was weaker at 3.5% YTD (vs. 5.2% YTD growth in 1QFY17).
• We think the impact of the State Bank of Vietnam’s planned investigation into VPB’s consumer finance arm, FE Credit, will result in short-term headwinds.
• We cut our FY18-19F EPS forecasts by 2.2-3.6%, on lower loan growth expectations for FE Credit. Consequently, our TP falls to VND59,500.
• We upgrade our rating to Add from Hold as we think the sharp price correction is overdone

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