Continue to strengthen the individual customer and SME business segments.
Superior technology, industry-leading data capabilities, and a talented workforce have enabled Techcombank to achieve impressive business results in 2023, with Total Operating Income (TOI) of VND 40 trillion, a high Capital Adequacy Ratio (CAR) of 14.4%, the lowest Non-Performing Loan (NPL) ratio in the industry at 1.2%, and current account deposits (CASA) reaching 40%.
However, according to Techcombank CEO Jens Lottner: "2023 was a challenging year, and our diversification of the credit portfolio is lagging behind schedule."
"From that perspective, choosing to lend to large businesses, instead of focusing on shifting to individual customers and small and medium-sized enterprises (SMEs) at all costs, is a safer strategy for the bank, given that customers in these segments don't have excessive borrowing needs," he shared. The CEO of Techcombank also added that the bank will continue to promote lending to individual customers and SMEs to diversify its credit portfolio when conditions permit.
In this diversification strategy, the bank also shifted its lending activities towards emerging and rapidly growing segments of the Vietnamese economy and has initially achieved some success. The loan portfolio for sectors other than real estate, materials, and construction grew by 60% in 2023.
Reaching new heights
With its leading position in the Vietnamese banking industry in terms of CASA portfolio, Techcombank aims to achieve 55% CASA by 2025, bringing the bank on par with the largest credit institutions in the ASEAN region such as UOB and DBS.
This is a completely achievable goal. According to Mr. Lottner, the bank can increase its CASA ratio thanks to several features that customers are using, such as Auto-earning. At the same time, the CASA ratio is almost unaffected by interest rate fluctuations – a factor that negatively impacts many business activities. And in the first quarter of 2024, the bank's CASA ratio reached 40.5%, taking the leading position in the banking industry, with CASA balances increasing sharply by 49.4% compared to the same period last year.
"The higher the CASA ratio, the more secure the bank's cost of capital is," added Jens Lottner.
Techcombank demonstrates the right strategy by focusing on the "Mass Affluent" (mid-income) and "Affluent" (high-income) customer segments. This is especially relevant given the continuously rising disposable income and the expanding middle class, which now represents a significant portion of Vietnam's 100 million population.
Jens Lottner shared that Techcombank will not stop at attracting CASA from individual customers. "We have a more ambitious CASA plan. More specifically, we are focusing on providing differentiated packages for small and medium-sized enterprises (SMEs), micro-enterprises, and merchants, making Techcombank the primary transaction bank for our customers," Lottner said.
With its current Net Interest Margin (NFI)/Total Interest Rate (TOI) at 26%, Techcombank aims to reach 30% soon, while also achieving a 20% return on equity.
"We believe that in 2024 and 2025, our diversification strategy will pay off and we will achieve the key milestones we have set," Jens Lottner affirmed.
Techcombank has less than two years to realize its ambition of becoming a bank with a market capitalization of $20 billion. If Techcombank succeeds, this will mark a significant leap forward from its current valuation of around $6-7 billion. With that market capitalization, Techcombank will rise to the top 10 leading banks in Southeast Asia.
Ready to welcome strategic investors.
Techcombank also expressed interest in seeking strategic investors, as beyond the value they bring, the ultimate goal is to enhance the bank's value through the trust of one or more selected reputable partners. "We are ready to welcome strategic investors or long-term investors to partner with us in building our brand and increasing value beyond capital in various forms. This could be a single investor, but it could also be several highly reputable institutional investors participating with a stake of 1% to 5%, and who will continue to advise us on how to improve our business model and operations as well as meet ESG standards."
Techcombank has attracted attention with its plan to pay cash dividends in 2024, for the first time in a decade. This is clear evidence of its ability to maintain a 20% growth trajectory and a CAR ratio of 14-15% while still being able to pay dividends.
"And we will do it sustainably," Jens Lottner affirmed.
Becoming a next-generation bank
The journey of continuously improving operational efficiency also requires an openness to acquiring additional professional knowledge. As Techcombank shifted its focus to accelerate the transformation process, it strengthened its Board of Directors by appointing three new members who possess extensive experience in the banking sector, particularly in risk management and asset management.
Notably, Techcombank successfully invited Eugene Keith Galbraith, former Chairman of the Board of Trustees and Deputy General Director of Banking Asia (BCA), to serve as an independent member of its Board of Directors. His extensive experience includes driving CASA, attracting high-income (affluent) clients, and digital innovation at BCA throughout his 17-year tenure.
Technologically, Techcombank continues to implement revolutionary upgrades, such as migrating a significant amount of workload to the cloud and building a data ecosystem that enables the bank to deliver new, unique value propositions and ultimately serve its customers more effectively and sustainably.
Jens Lottner emphasized that ESG will be central to Techcombank in 2024: "We aim to become a next-generation bank, so our operations must reflect our respect for people, support the entire Vietnamese community, and promote strong, forward-looking governance so that ethical actions and decisions become the norm."
Source: https://thanhnien.vn/tong-giam-doc-jens-lottner-techcombank-tu-tin-vuon-tam-cao-moi-185240509154014292.htm
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