ACB [BUY +39.7%] - Conservative strategy paying off in asset quality and COF - Update

- We maintain our target price (TP) for ACB at VND29,800/share and keep our BUY rating. We maintain our forecast for aggregate 2023-2027F NPAT almost unchanged (+0.2%/+1.4%/+2.2%/-1.1%/-2% for 2023/24/25/26/27F, respectively).
- We increase our 2023F net income by 0.2% to VND15.7tn (USD655mn; +14.7% YoY) due to (1) a 2.8% cut in OPEX that is nearly offset by (2)a 12.7% increase in provision expenses.
- We maintain our 2023F NPL ratio at 1.05%. We believe a high provisioning buffer compared with other private banks and strong projected PPOP performance will support ACB to book relatively aggressive bad debt write-offs in 2023 and a comparatively modest increase in NPLs.
- Downside risks: (1) Higher-than-expected restructured loans under Circular No.02/2023/TT-NHNN; (2) lower CASA ratio vs our forecast; (3) weak performance of bancassurance.