S&P Global Ratings maintains Techcombank's outlook with positive rating

S&P Global Ratings (S&P) has just announced the results of the 2024 annual rating assessment report of Vietnam Technological and Commercial Joint Stock Bank ( Techcombank ), which continues to affirm the Bank's "BB-" issuer rating and "Stable" Outlook, higher than the "b+" anchor score of the banking industry in Vietnam.

The report noted positive changes from Techcombank with profit growth, stable capitalization and asset quality, diversified deposit base and low-cost management thanks to technology and product innovations.

In this review, S&P emphasized that it believes Techcombank will be able to maintain above-industry profitability in addition to stable capitalization and asset quality. The rating agency also expressed the view that Techcombank's large, low-cost, and stable deposit base will help mitigate risks related to wholesale funding sources during market volatility.

According to S&P, the “Stable” outlook reflects the view that Techcombank will maintain “its strong deposit base and above-industry profitability over the next 12-18 months.” Furthermore, S&P affirms its confidence in the Bank’s continued superior profitability, contributing to supporting a credit growth rate higher than the industry average.

Techcombank has been noted as a bank that has generated outstanding returns with a core return on total assets of up to 3% over the past four years, significantly higher than the industry average of 1-1.5%. The drivers of this outstanding performance, as S&P sees it, are “a high-margin loan portfolio, a large proportion of low-cost funding and strong non-interest income”.

In addition, an important part of S&P's latest assessment is Techcombank's capital structure. The rating agency has highly appreciated the Bank's unique ability to diversify its capital sources. Thanks to that, Techcombank can receive diversified capital sources, longer maturities and lower mobilization costs.

S&P also believes that Techcombank will “continue to attract a diversified, low-cost deposit base through innovative savings products and an enhanced digital banking experience. This will help the Bank maintain one of the highest current account and savings account (CASA) ratios in the industry and very competitive funding costs.”

Finally, in its latest announcement, S&P revised its assessment in Techcombank's upgrade scenario, in which the agency said that it could "upgrade the rating" if the Bank's risk-adjusted capital ratio (RAC) improves in the next 12-18 months.

This is a significant change from the last assessment, which stated that “an upgrade is unlikely”. This assessment by S&P is completely consistent with Techcombank’s announced and implemented strategy to further diversify its credit portfolio. This will significantly change the asset structure with an increased proportion of lower risk-weighted assets, thereby optimizing the return on total risk-weighted assets and increasing the likelihood of being upgraded by various credit rating agencies in the near future.

Source: https://nhandan.vn/sp-global-ratings-duy-tri-trien-vong-cua-techcombank-voi-danh-gia-tich-cuc-post843836.html