Moody's upgrades outlook of Techcombank in 2024

Techcombank is one of the first banks to have its outlook upgraded by Moody's in 2024, reflecting the rating agency’s recognition of the bank’s resilience in the challenging environment of 2022–2023.

The ratings, BCA affirmation, and outlook revision to stable are based on Techcombank's above-industry average capitalization and profitability, supported by its stable funding.

Specifically, Techcombank's capital adequacy and performance ratios continue to be higher than industry averages, supported further by diverse funding sources.

According to Moody’s report, the bank's above-industry average capitalization and profitability will support its ratings.

Its Tier 1 capital ratio was at 14% as of the end of December 2023, while its return on average assets (ROAA) was 2.4% in 2023, compared to the peer average ROAA of 1.4% over the same period.

According to data published by S&P Capital IQ at the end of February 2024 on the ROA index of Southeast Asia and India banks with book values of more than US$3 billion during 2019-2023, Central Asian Bank (BCA) of Indonesia and Techcombank (Vietnam) are leading with ROAs of 3.1% and 3.0%, respectively.

Graphics by Techcombank

Techcombank's funding and liquidity will remain broadly stable. Its deposit base improved in 2023 with gains in its current and savings account deposits (CASA) ratio to 40%, a level that is one of the highest among Vietnamese banks rated by Moody's.

The bank's efforts to mobilize deposits and the satisfactory liquidity in the system supported its good deposit growth in 2023.

Graphics by Techcombank

Moody's expected credit risks from the bank's sizeable exposure to the real estate sector to stabilize over the next 12–18 months. It assessed that Techcombank will benefit from the recovery of the real estate market as home purchases increase, contributing to a rise in both the absolute value and ratio of home loans to real estate loans.

This remark is particularly derived from the bank’s focus on lending investors and developers real estate of better quality than the market's average level.

Real estate transactions in Vietnam have shown many positive signs, with market supply expected to increase in an environment where interest rates have fallen sharply from 200 to 300 points recently.

The recovery of the economy, plus positive and timely policies and direction from the government, will contribute to a stronger recovery of the real estate market in the near future.

A high capital adequacy ratio and the ability to operate effectively (including profitability) are also important factors in Moody's assessment.