The report points to positive changes. Techcombank has stable profit growth, capitalization and asset quality.
Techcombank has been rated ‘BB-‘ by S&P Global Ratings and its outlook is ‘stable’. – Photo: Techcombank
GReceived positive changes from Techcombank
Vietnam Technology and Commercial Joint Bank (“Techcombank” or TCB) has released its 2024 Annual Rating Review Report by S&P Global Ratings (“S&P”), reaffirming the bank’s ranking. The bank’s “BB-” issuance and “stable” outlook are higher than the ‘b+’ threshold for the Vietnamese banking industry.
The report notes Techcombank’s positive transformation through profit growth, capitalization and stable asset quality, a diversified deposit base and low-cost management, driven by technological and product innovations.
During the review period, S&P highlighted that it believed Techcombank would maintain above-average profitability, along with stable capitalization and asset quality.
The rating agency also expressed the view that Techcombank’s large, low-cost, stable deposit base will help mitigate the risks associated with wholesale funding sources during market fluctuations.
Additionally, according to S&P, the ‘stable’ outlook reflects the expectation that Techcombank will maintain ‘a strong capital mobilization network and revenues above the industry average over the next 12 to 18 months.’
S&P is also reassured by the bank’s continued superior profitability, helping to support credit growth above the industry average.
According to records, Techcombank is a bank that has created outstanding profitability over the past three years, with a core rate of return of up to 4% on total assets, significantly exceeding the industry average of 1-1.5%.
As S&P acknowledges, the driving force behind these outstanding results is “a high-margin loan portfolio, a proportion of low-cost deposits and large non-interest income.”
“We are very pleased that the credit rating agency S&P has recognized the progress the bank has made on several fronts, including superior earnings, capitalization and stable asset quality, diverse deposit base formats, and low costs through technology and product innovation.”
Although both the rating and outlook were maintained, S&P’s latest rating update was more positive about the bank’s operating environment, reflecting both Vietnam’s strong GDP growth and the quality of the bank’s credit portfolio, after remaining of very sound quality during a slowdown in the real estate market. Take perspective. It has declined over the past two years.
S&P has aligned the Techcombank rating upgrade scenario using criteria consistent with the bank’s announced credit direction, particularly with regard to future portfolio diversification,” shared Mr. Alex Macaire, Group Finance Director.
Techcombank is among the best banks with bad debt levels system lowest
Techcombank is also always among the top banks with the lowest levels of bad debts and liabilities requiring attention in the entire 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 continues to recover.
Vietnam’s real estate sector is also expected to see a strong recovery by 2025, according to the group, with many laws on land and real estate being promulgated.
According to S&P and many analysts (based on Q3 2024 results), this will benefit Techcombank due to the nature of the bank’s business model.
S&P recently noted that the bank’s asset quality has been “tested by fire” during a period when real estate-related bad debt levels have always been low, despite the sector’s outstanding credit debt ratio being significantly higher. Full product.
Techcombank is also always among the top banks with the lowest levels of non-performing debt and liabilities requiring attention in the entire banking system.
An important aspect of S&P’s recent assessment is Techcombank’s capital structure. The rating agency praised the bank’s particular ability to diversify its capital sources.
This allows Techcombank to access diverse capital sources, longer maturity periods and lower mobilization costs. S&P also believes that Techcombank “will continue to attract diverse and affordable deposits through innovative savings products and enhanced digital banking experiences.”
This will help the bank maintain the highest checking and savings account (CASA) ratios in the industry and highly competitive funding costs.
Finally, in a recent announcement, S&P revised its assessment of Techcombank’s upgrade scenario. Here, S&P believes it could “upgrade its rating” if its risk-adjusted capital ratios (a bank’s RAC) are expected to improve over the next 12 years. -18 months.
This is a significant change compared to the most recent rating of “Unlikely to Upgrade”. This assessment by S&P is fully consistent with the strategy announced and implemented by Techcombank to further diversify its credit portfolio.
This will significantly change the asset structure by increasing the proportion of low-risk-weighted assets, optimizing the return on total risk-weighted assets, and increasing the likelihood of being upgraded by various credit rating agencies in the near future.
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