S&P affirms Techcombank’s BB- rating

S&P praised Techcombank for maintaining above-industry average profitability, with a core return on assets of 3% over the past four years -significantly higher than the industry average of 1.0-1.5%. The bank’s success is attributed to its high-margin loan portfolio, low-cost funding and strong non-interest income.

Transactions at a Techcombank branch. (Photo: Courtesy of the bank)

S&P's “stable” outlook reflects expectations that Techcombank will continue to maintain a strong capital base and superior profitability in the next 12-18 months. The agency also noted the bank's healthy credit portfolio, even amid challenges in the real estate sector and forecast improvement in non-performing loans (NPLs) as Vietnam’s economy recovers.

Techcombank's capital diversification strategy was also praised, with S&P noting the bank's ability to attract low-cost, long-term deposits through innovative products and digital banking. This positions Techcombank to sustain its competitive funding costs and maintain one of the highest current and savings account (CASA) ratios in the industry.

S&P revised its outlook on Techcombank’s rating upgrade, stating that an upgrade is now possible if the bank’s risk-adjusted capital (RAC) ratio improves over the next 12-18 months, reflecting the bank’s ongoing efforts to diversify its credit portfolio and optimise asset returns.

“We’re pleased that S&P has acknowledged the progress the bank has made across several areas: strong profitability, solid capitalisation and asset quality and a diversified, low-cost deposit base supported by innovation in technology and products,” said Alex Macaire, Techcombank’s Chief Financial Officer.

“While both the rating and outlook remain unchanged, S&P’s latest update reflects a more positive view of the bank’s operating environment. This is due to Việt Nam’s robust GDP growth and the continued high quality of the bank’s credit portfolio, which has remained strong even as the real estate market slowed over the past two years.

"S&P has also updated its rating outlook for Techcombank, aligning with the bank’s stated strategy, particularly in terms of further diversifying its portfolio in the future,” said the CFO.