In this review, S&P emphasized that Techcombank is likely to 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 in volatile markets.

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

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According to S&P’s report, Techcombank is a bank that generates outstanding profitability with a core return on total assets of up to 3% over the past 4 years, significantly higher than the industry average of 1.0-1.5%. The drivers of this outstanding performance, as S&P acknowledges, are “a high-margin loan portfolio, a large proportion of low-cost funding, and large non-interest income”.

Mr. Alex Macaire - Chief Financial Officer of Techcombank shared: “We are pleased that the credit rating agency S&P has recognized the progress that the bank has made in a number of aspects: outstanding profitability, stable capitalization and asset quality, diversified deposit base and low costs supported by technology and product innovation”.

Regarding asset quality, S&P expects Techcombank's non-performing loans (NPLs) to gradually improve over the next 12-18 months as Vietnam's GDP growth continues to recover. S&P also believes that with the promulgation of many laws on land and real estate, Vietnam's real estate sector is expected to recover strongly by 2025.

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A key component of S&P’s latest assessment is Techcombank’s funding structure. The rating agency highlighted the bank’s unique ability to diversify its funding sources, which allows Techcombank to access diversified funding sources, longer maturities, and lower funding costs. S&P also believes that Techcombank will “continue to attract diversified, low-cost deposits through innovative savings products and an enhanced digital banking experience. This will help Techcombank maintain one of the highest current and savings account (CASA) ratios in the industry and very competitive funding costs.”

Finally, in the release, S&P revised its assessment of Techcombank’s upgrade scenario, saying that it could “upgrade the rating” if the bank’s risk-adjusted capital ratio (RAC) improves over the next 12-18 months. This is a significant change from its last assessment, which said “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 assets with lower risk weighting, 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,” said a Techcombank representative.

Techcombank rating by S&P Global Ratings

· Issuer credit rating: BB-/Stable

· Banking industry rating: b+

· Business position: Strong (+1)

· Capital and income: Moderate

· Risk position: Appropriate

· Capital & Liquidity: Adequate and Appropriate

· Government Support: +0

Bui Huy