VNDIRECT downgrades STB to Neutral, citing limited upside and a long-term outlook contingent on the resolution of the 32.5% stake linked to Tram Be

VNDIRECT downgraded Sacombank (STB) to Neutral from Positive, noting that the upside potential is no longer attractive after a strong price rally. The long-term outlook depends heavily on how the 32.5% stake related to Tram Be is resolved. The brokerage's latest update indicates STB's current valuation already reflects much of the expected improvement in operating performance and the lengthy restructuring. This makes short-term upside less compelling, particularly amid broader market volatility. The key factor remains the handling of the 32.5% stake, seen as the 'final bottleneck' in the bank's restructuring. If the stake sale proceeds, the deal could bring substantial proceeds, helping STB absorb provisions and significantly improve profitability for a period. The stake's value could reach tens of trillions of dong, depending on the auction price, but progress and feasibility remain uncertain, leaving the medium-term outlook for STB as an open question. Beyond this potential one-off from the stake, STB's core operations are showing improvement. The bank has made notable progress in disposing legacy assets, with the ratio of problem assets falling compared with earlier periods, providing a foundation for better balance-sheet quality. However, asset-quality pressures are not fully resolved. The non-performing loan (NPL) ratio is trending higher in 2025, mainly due to re-categorization of restructured loans and some large credits, which could require further provisioning. On the operational side, STB is pushing ahead with restructuring to optimize costs and improve efficiency. The cost-to-income ratio has fallen significantly through leaner staffing and optimized branch networks, supporting margin improvement. Additionally, the newly appointed management is expected to accelerate digital transformation and strengthen competitiveness, though changes may take time to clearly reflect in results, while markets tend to react quickly to short-term factors. VNDIRECT forecasts STB's 2026 profit to grow modestly as the bank prioritizes risk control and legacy-asset resolution; a stronger growth scenario might appear only in 2027 if the stake auction proceeds smoothly. In this context, the downgrade to Neutral reflects a balance between long-term potential and near-term risks. STB remains a restructuring story, but the certainty of supporting factors is not yet clear enough to justify a higher rating. VNDIRECT notes that Sacombank faces a turning point after years of dealing with legacy issues, but near-term prospects depend heavily on progress on the 32.5% stake. Until this is clarified, STB's stock is likely to remain in a trading range as investors weigh the risks. As of 17/4, STB traded at 64,000 dong per share, with a volume of over 3.7 million shares and a market capitalization of more than 120,653 billion dong.