- We increase our target price (TP) for TPB by 22.2% to VND22,200/share and upgrade our OUTPERFORM rating to BUY. Our higher TP is mainly driven by (1) the positive impact of rolling our TP horizon forward from end-2024F to end-2025F, and (2) a 4.3% aggregate increase in our projection for 2024-2028F NPAT. Our TP implies a 2025F P/B of 1.28x.

- We raise our aggregate 2024-2028F NPAT forecast by 4.3% (-1.5%/-1.7%/-0.7%/+7.4%/+12.3% for 2024/25/26/27/28F, respectively) mainly due to (1) increasing our forecast for a reduction in our 2024-2028F average CIR forecast to 36% from 44%, reflecting TPB’s improved efficiency in managing administrative costs over the past two years. These factors outweigh (1) a 1.5% aggregate decrease in forecasted NOII and (2) a 9.3% aggregate increase in provision expenses. 

- TPB’s asset quality is trending toward improving but slower than our previous expectation. The NPL formation has gradually declined, with Group 2 loans/total loans decreasing from a peak of 4.02% in Q1 2023 to 2.22% in Q3 2024. However, TPB's NPL ratio stood at 2.29% in Q3 2024, and restructured loans under Circular 02 accounted for 0.83% of total loans (+51 bps QoQ). As a result, we expect continued pressure on provision expenses in Q4 2024 and have upward revised our forecast for 2024F provision expenses by 31.8% to VND4.0tn (+2.5% YoY).

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