- We increase our target price (TP) for STB by 1.8% to VND50,900/share and maintain our BUY rating. Our higher TP is due to (1) the positive impact of rolling our TP horizon to mid-2026F, and (2) a 4.5% increase in our aggregate 2025-2029F projected NPAT forecast (respective changes of -8.6%/+30.3%/-1.5%/ +17.0%/-9.6% for 2025/26/27/28/29F), which outweigh the negative impact of the delay in proceeds from the sale of Phong Phu, now expected in 2026 instead of 2025.

- In this Update, we maintain our expectation that the SBV will approve the plan to sell the 32.5% stake of Mr. Tram Be, which was pledged as collateral at VAMC, in 2025. Furthermore, we expect STB to reverse the provision related to this legacy asset in 2026F, which corresponds to the principal amount of the bad debts, totaling VND6.6tn. Please refer to Figure 2 for further details. This assumption is supported by STB's recent proposal to pay stock dividends to its shareholders, signaling that the restructuring process is nearing completion as STB’s CEO shared at the 2024 AGM that the bank cannot pay stock or cash dividends until the owners of the 32.5% stake have been identified. 

- Previously, we expected STB to write off the VAMC loans and record recovery income in net other income after receiving payments from the sales of Phong Phu and the 32.5% stake. However, following the bank's decision to reverse the VAMC provision expenses (instead of writing off), we have revised down our forecast for 2025-2029F aggregate provision expenses by 72.8%. This change is primarily due to shifting the recovery income from bad debts to the reversal of provisions and NII. Particularly in 2026, when STB sells the 32.5% stake, we expect STB's provision expenses could turn positive at VND4.6tn.

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