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VCB [M-PF +8.3%] - Healthy balance sheet with solid growth outlook - Update

We issue a MARKET PERFORM rating for VCB with 8.3% total return. The stock is trading close to its fair value, but we are positive on its fundamentals and strong profit growth outlook. Expected 40.1% 2017 NPAT growth is driven by high loan growth, higher NIM and a drop in provision expense as VCB completed VAMC provisioning last year. 2018 NPAT growth will normalize to 22.4% as we expect similar loan growth and provision expense as in 2017 and a 9 bps increase in NIM.