The report notes positive changes since Techcombank with stable growth in profits, capitalization and asset quality.
Techcombank is rated “BB-” by S&P Global Ratings and has a “stable” outlook – Photo: Techcombank
GReceive positive changes from Techcombank
Vietnam Technology and Commercial Joint Stock Bank (“Techcombank” or TCB) announced by S&P Global Ratings (“S&P”) its Annual Rating Review Report for 2024, which reaffirms its rating with “BB-” issuance and the bank’s “stable” outlook. , higher than the “b+” anchor point of the banking sector in Vietnam.
The report notes positive changes from Techcombank with profit growth, stable capitalization and asset quality, diversified deposit base and low-cost management through technological and product innovations.
During this review period, S&P emphasized that it believes Techcombank will likely maintain profitability above the industry average, in addition to stable capitalization and asset quality.
The rating agency also believed that Techcombank’s large, low-cost and stable deposit base would help mitigate risks associated with wholesale funding sources when the market fluctuates.
Still, according to S&P, the “stable” outlook reflects the view that Techcombank will maintain “the strength of its capital raising network and its earnings above the industry average over the next 12 to 18 months.”
Additionally, S&P affirms its peace of mind in the bank’s continued exceptional profitability, helping to support a rate of credit growth above the industry average.
According to records, Techcombank is a bank that creates exceptional profitability with a core return on total assets of up to 3% over the last 4 years, significantly higher than the industry average of 1-1.5%. .
The driving forces behind this exceptional result, as S&P admits, are “a high-margin loan portfolio, a large proportion of low-cost deposits and strong non-interest income.”
“We are very pleased that the S&P credit rating agency has recognized the progress made by the bank in several aspects: exceptional profits, stable capitalization and asset quality, diversified deposit base form and low costs supported by the technological and product innovation.
Although the ratings and outlook were maintained, S&P’s latest ratings update takes a more positive view of the bank’s operating environment, reflecting both Vietnam’s high GDP growth rate and quality of the bank’s credit portfolio, after having maintained a very healthy quality when the real estate market slowed down over the last 2 years.
S&P also adjusted Techcombank’s rating upgrade scenario, with criteria consistent with the bank’s stated credit focus, particularly with regard to increased portfolio diversification in the future” – shared Mr. Alex Macaire, group financial director.
Techcombank is among the top banks with bad debt levels lowest system
Techcombank is also consistently among the top banks with the lowest levels of bad debts and debts requiring attention across the banking system – Photo: Techcombank
Regarding asset quality, S&P expects banks’ non-performing loans (NPLs) to gradually improve over the next 12 to 18 months as Vietnam’s GDP growth rate continues to recover.
In addition, according to this organization, along with the promulgation of numerous laws on land and real estate, Vietnam’s real estate sector is also expected to experience a strong recovery by 2025.
This, according to S&P and many analysts (based on Q3 2020 results), will benefit Techcombank due to the characteristics of the bank’s business model.
S&P noted that the Bank’s asset quality has been “put to the test” in the recent period where, although the proportion of outstanding credit debts in the real estate sector is quite large, the level of receivables unrecoverable costs linked to real estate is always lower. the entire product.
Techcombank also consistently ranks among the top banks with the lowest levels of bad debt and debt requiring attention in the entire banking system.
An important element of S&P’s latest assessment concerns Techcombank’s capital structure. This rating agency highly appreciated the bank’s particular ability to diversify its sources of capital.
Through this, Techcombank can receive various sources of capital, longer maturity periods and lower mobilization costs. S&P also believes that Techcombank “will continue to attract diversified, low-cost deposits through innovative savings products and enhanced digital banking experiences.”
This will help the bank maintain one of the highest Current Account Savings Account (CASA) ratios in the industry and very competitive funding costs.
Finally, in its latest announcement, S&P revised its assessment of Techcombank’s upgrade scenario, in which the agency believes it can “upgrade” if the bank’s risk-adjusted capital ratio (RAC) is expected to improve. improve over the next 12 years. -18 months.
This is a significant change from the most recent assessment, with “an upgrade unlikely.” This assessment by S&P is entirely consistent with the strategy announced and implemented by Techcombank to further diversify its credit portfolio.
This will significantly change the asset structure with an increased proportion of risk-weighted assets, thereby optimizing returns on total risk-weighted assets and increasing the possibility of being upgraded by various credit rating agencies in a near future.
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