VCB – Strengthened foundation supports high growth

■ VCB’s net profit grew 29% yoy in FY16, driven by 19% loan growth and stable NIM
■ Provision expenses only increased by 6% last year, which helps explain why the bank’s bottom line earnings outpaced its 20% NII growth and 11% non-NII growth
■ Most operating metrics improved in FY16, and are in good shape to support another year of robust growth in FY17F; we expect 23% net profit growth this year.
■ We maintain our Add rating on VCB, but recommend investors time their entry to purchase VCB’s shares at valuations below 2.4x P/BV.