Techcombank delivers strong 2020 financial results

Techcombank maintained its position as the best capitalised bank in Vietnam in 2020

Techcombank, one of the largest commercial banks in Vietnam, recorded a pre-tax profit of VND15.8 trillion ($686.96 million) for 2020, up 23.1 per cent versus 2019 and 21.5 per cent higher than the full-year target approved at the bank’s annual general meeting of shareholders.

The bank continues to lead the market with a healthy 3.1 per cent return on assets (ROA) for the last 12 months ending on December 31, 2020. Capital position remains robust with Basel II CAR of 16.1 per cent at year-end.

These financial results complete the successful execution of the 2016-2020 strategy and were achieved against the most challenging economic environments in Vietnam in over a decade due to the COVID-19 pandemic.

Together with the government and the broader banking sector, Techcombank took measures during the year to support the economy and share hardships with individual and corporate customers including introducing a comprehensive support package worth VND41.2 trillion ($1.8 billion) for over 3,200 customers covering interest waiver, reduction, and debt rescheduling.

According to Techcombank CEO Jens Lottner, amid a challenging and uncertain operating environment in 2020, the bank took a number of measures throughout the year to support customers and strengthen the bank’s balance sheet to weather the crisis.

These measures included rescheduling loans for customers impacted by COVID-19, offering preferential interest rates, increasing liquidity to ensure they had ample credit for customers while accelerating write-offs to maintain healthy asset quality.

“Our 2020 financial results reinforce that the long-term growth drivers and business fundamentals for Vietnam and Techcombank are intact. Going forward, we will continue to focus on the consistent execution of our strategy and invest in digitalisation to scale our business to meet the needs of our growing customer base,” said Lottner.

“With our expanded leadership team and the capabilities and capital built over the last five years, coupled with the success of the government in containing the impacts of COVID-19, we remain well-positioned to deliver our 2021-2025 strategy and vision of becoming the leading bank in Vietnam,” he noted.

Techcombank’s total operating income (TOI) grew 28.4 per cent to VND27 trillion ($1.17 billion) in 2020, outpacing an 18.0 per cent increase in operating expenses. Net Interest Income (NII) grew to VND18.8 trillion ($817.4 million), up 31.5 per cent on-year. Net fee and commission income (NFI) grew 28.8 per cent on-year to VND4.2 trillion ($182.6 million), driven by increased lending volume and lower cost of funds.

Bond underwriting fees continued to be the largest contributor to NFI, generating VND1 trillion (43.5 million), up 7 per cent on-year, on the back of VND66.8 trillion ($2.9 billion) of bond issuance volume.

Bancassurance fees were down 11 per cent on-year but momentum picked up in the fourth quarter with strong month-over-month growth driven by increased productivity and new leadership.

Operating expenses were VND8.6 trillion ($373.9 million) in 2020, up 18 per cent on-year. Cost to income ratio (CIR) declined to 31.9 per cent from 34.7 per cent a year ago as the bank managed expenses more tightly given the uncertain outlook due to COVID-19.

In 2020, Techcombank proactively wrote off selected non-performing loans which resulted in provision expenses increasing to VND2.6 trillion ($113 million) from VND917 billion ($39.87 million) in 2019, and, hence, higher credit costs of 1.1 per cent compared to 0.5 per cent in the prior year.

Total assets were VND439.6 trillion ($19.1 billion) at the end of 2020, an increase of 14.6 per cent from 2019. Total credit provided to customers as of December 31, 2020 was VND318 trillion ($13.83 billion), an increase of 23.3 per cent over 2019 and in line with the expanded credit limit granted by the central bank (SBV).

Significantly, Techcombank maintained ample liquidity, exceeding regulatory requirements with a loan-to-deposit ratio (LDR) of 78.1 per cent and short-term funding to medium-to-long-term loans ratio of 33.9 per cent, improving from the 38.4 per cent at the end of 2019.

During the year the bank completed a $500 million syndicated loan to diversify its funding base and ensure the bank has ample liquidity to support customers through the COVID-19 crisis.

Techcombank also maintained its position as the best capitalised bank in Vietnam with a Basel II Capital Adequacy Ratio (CAR) of 16.1 per cent, more than double the Basel II Pillar I minimum requirement of 8 per cent and up from 15.5 per cent at the end of 2019.

During 2020, the Hanoi-based lender added 1.1 million net new customers to bring total customers served to 8.4 million. The bank has continued to maintain high safety standards to protect customers and employees while keeping all branches and ATMs operating normally during 2020.

These actions combined with its leadership position in digital banking ensured that customers continued to be well-served during periods of lock-down, social-distancing restrictions, and subsequent relaxation and resumption of normal activities.

Retail customer transaction volume and value during 2020 through Techcombank’s e-banking channels increased to $383 million and VND5 quadrillion ($217.4 billion), up 108.8 per cent and up 84.2 per cent on-year.

In October 2020, Techcombank received the Best Payments Bank in Vietnam award by The Asian Banker for its large intra-day processing payment capabilities and competitive brand franchise in 2020.

Despite continuous challenges in 2020 due to COVID-19, the bank increased throughput capacity to 13 million transactions per day while successfully expanding its host-to-host payment solution used by some large customers to fully migrate all payment transactions (cross-border, domestic, customs) to its e-channel, reducing their lead time for payments and operational costs significantly.

The bank was also named Best Bank in Vietnam 2020 by FinanceAsia and its $500 million inaugural syndicated loan was named Best Syndicated Loan” in Vietnam in 2020 by The Asset.

In December 2020, Moody’s Investor Service reaffirmed Techcombank’s rating at Ba3, reflecting the bank's stable asset quality, solid profitability, and strong capitalisation.