We raise our target price (TP) for STB by 15.1% to VND34,300/share and maintain our BUY rating.

Our higher TP is mainly derived from (1) a 28.5% increase in our forecast for aggregate 2023-2027F NPAT and (2) decreasing our assumption for STB’s cost of equity from 16.2% to 15.6% due to an updated beta.

We increase our 2023F NPAT by 28.6% to VND10.2tn (+101.5% YoY) mainly thanks to (1) a 13.4% increase in NII following a 58-bp upward revision in our NIM assumption, (2) a 4.4% increase in NFI (including gains from FX trading) and (3) a 6.3% decrease in OPEX. These factors are partly offset by a 14.9% increase in provision expenses. We assume no provision expenses for VAMC will be booked in 2023.