Techcombank is rated 'BB-' by S&P Global Ratings, outlook 'stable'

The report noted positive changes from Techcombank with stable growth in profits, capitalization and asset quality.

Techcombank is rated 'BB-' by S&P Global Ratings with a 'stable' outlook - Photo: Techcombank

G recognizes positive changes from Techcombank Vietnam Technological and Commercial Joint Stock Bank ("Techcombank" or TCB) has been announced by S&P Global Ratings ("S&P") in its 2024 annual rating review report, which reaffirmed the bank's "BB-" issuer rating and "stable" outlook, higher than the "b+" anchor of the banking industry in Vietnam. The report recognized positive changes from Techcombank with profit growth, stable capitalization and asset quality, a diversified deposit base and low-cost management thanks to technological and product innovations. In this review, S&P emphasized that it believes Techcombank will likely maintain above-industry average 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 when the market is volatile. According to S&P, the "stable" outlook reflects the view that Techcombank will maintain "the strength of its capital mobilization network and above-industry average profitability over the next 12-18 months." Furthermore, S&P affirmed its confidence in the bank's continued superior profitability, contributing to supporting a credit growth rate higher than the industry average. According to the record, Techcombank is a bank that generates outstanding profit yields with a core return on total assets of up to 3% over the past 4 years, significantly higher than the industry average of 1-1.5%. The drivers of this outstanding performance, as S&P acknowledged, are "a high-margin loan portfolio, a large proportion of low-cost mobilization and large non-interest income". "We are pleased that S&P has recognized the progress the Bank has made on several fronts: superior profitability, stable capitalization and asset quality, a diversified and low-cost deposit base supported by technological and product innovation." While both the rating and outlook have been maintained, S&P's latest rating update has a more positive view on the bank's operating environment, reflecting both Vietnam's high GDP growth rate and the quality of the bank's credit portfolio, which has maintained very healthy quality as the real estate market has slowed over the past two years. S&P has also revised its rating scenario for Techcombank, with criteria consistent with the Bank's announced credit direction, especially related to further portfolio diversification in the future," said Alex Macaire, Group Finance Director. Techcombank is among the top banks with the highest level of bad debt.   lowest system

Techcombank is also always in the top banks with the lowest levels of bad debt and debt requiring attention in the entire banking system - Photo: Techcombank

In terms of asset quality, S&P expects that banks' non-performing loans (NPLs) will gradually improve over the next 12-18 months as Vietnam's GDP growth continues to recover. In addition, according to this organization, along with the promulgation of many laws on land and real estate, Vietnam's real estate sector is also expected to recover strongly by 2025. This, according to S&P and many analysts (based on the results of the third quarter of 2024), will benefit Techcombank due to the characteristics of the bank's business model. S&P noted that the Bank's asset quality has been "tested" in the recent period when, despite the large proportion of outstanding credit in the real estate sector, real estate-related NPLs have always been lower than the NPLs of the entire bank. Techcombank has also always been in the top banks with the lowest NPLs and NPLs in the entire banking system. A key part of S&P’s latest assessment is Techcombank’s capital structure. The rating agency has praised the bank’s unique ability to diversify its capital sources, which allows Techcombank to access diversified sources of funding, longer maturities, and lower funding 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 the latest announcement, S&P revised its assessment in Techcombank's upgrade scenario, in which the agency said that they 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, with "an upgrade being unlikely". S&P's assessment is fully 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 risk-adjusted assets. lower, thereby optimizing risk-adjusted return on assets and increasing the likelihood of future upgrades by various credit rating agencies.

RATING SCORE Issuer Credit Rating: BB-/Stable Banking Industry Rating: b+ Business Position: Strong (+1) Capital & Earnings: Moderate Risk Position: Adequate Capital & Liquidity: Adequate and Adequate Government Support: +0

Source: https://tuoitre.vn/techcombank-duoc-sp-global-ratings-xep-hang-bb-trien-vong-on-dinh-20241108184916615.htm