Techcombank is the first bank to have outlook upgraded by Moody's in 2024, reflecting the rating agency’s recognition of the bank’s resilience throughout challenging environment of 2022-2023. (Photo courtesy of the bank) Baseline Credit Assessment Index (BCA) of Techcombank continues tobe in the group of leading banks in terms of business profile and risk profile,with affirmed rating of Ba3.
Techcombank is the first bank to have an outlook upgraded byMoody's in 2024, reflecting the rating agency’s recognition of the bank’sresilience throughout challenging environment of 2022-2023. The ratings, BCAaffirmation and outlook revision to stable are based on Techcombank's aboveindustry average capitalisation and profitability, supported by its stablefunding. Specifically, Techcombank's capital adequacy and performance ratioscontinue to be higher than industry averages, supported further by diversefunding sources.
According to a Moody’s report, Techcombank's above industry averagecapitalisation and profitability will support its ratings. Its Tier 1 capitalratio was at 14% as of the end of December 2023 while its return on averageassets (ROAA) was 2.4% in 2023, compared to the peer average ROAA of 1.4% overthe same period.
Data published by S&P Capital IQ at the end of February 2024on the ROA index of South East Asia and India banks with book value of morethan 3 billion USD during 2019-2023, revealed that the Central Asian Bank (BCA)of Indonesia and Techcombank are leading with ROAs of 3.1% and 3.0%,respectively.
Techcombank's funding and liquidity will remain broadly stable.Its deposit base improved in 2023 with gains in its current and savings accountdeposits (CASA) ratio to 40%, a level that is one of the highest amongVietnamese banks rated by Moody's. The bank's efforts to mobilise deposits andthe satisfactory liquidity in the system supported its good deposit growth in2023.
Moody's expects credit risks from the bank's sizeable exposure tothe real estate sector to stabilise over the next 12-18 months. Moody’sassessed that Techcombank will benefit from the recovery of the real estatemarket, as home purchases increase, contributing to a rise in both absolute andratio of home loans to real estate loans. This remark is particularly derivedfrom the bank’s focus on lending investors, developers of real estate of betterquality than the market's average level. Moody’s said that Techcombank's creditrisk related to real estate loans will be stable over the next 12-18 months.
According to Moody's, real estate transactions in Vietnam haveshown many positive signs, with market supply expected to increase, in anenvironment where interest rates have fallen sharply from 200 to 300 pointsrecently. The recovery of the economy, plus positive and timely policies anddirection of the Government will contribute to a stronger recovery of the realestate market in the near future. High capital adequacy ratio, and ability tooperate effectively (including profitability) is also an important factor inMoody’s assessment./.
VNA
