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ACB - Focused on core business again - AGM Note

At the AGM, we liked how ACB promptly restructured its operation and tackled bad debts over the last two years, even though it has dampened the bank’s profits. We believe ACB will resume above-average growth from 2014. For 2014, we expect ACB’s profit before tax to grow 16% driven by 13% loan growth and 17bps NIM expansion. Nevertheless, ROE should remain low (average 9.6% for the 2014-2018 period) which would negatively affects any valuation based on residual income and PB multiple.