At Techcombank’s AGM on April 22, questions were raised around Techcombank's bond investments and the bank's risk management in real estate lending.
Ho Hung Anh, chairman of the Board at Techcombank, stated that the bank's outstanding loans in the real estate sector were mostly concentrated on individual customers borrowing to buy houses, while for property developers, the bank focuses on good customers that it understands.
"Techcombank's loan projects all have full legal compliance and are being implemented in the current difficult period for the real estate market. Despite the current downturn in the real estate market, these projects are still generating sales and positive cash flows, resulting in a low non-performing loan ratio for Techcombank,” he said.
As further proof of the bank's stability, Anh added that the bank's Q1/2023 financial results would soon be released.
He said the difficulties in the real estate lending sector were not unique, and that Techcombank had diversified its offerings across various customer segments, including retail banking and small- and medium-sized enterprises (SMEs), over the past three to four years.
For consumer lending, Techcombank has implemented digital platforms and invested significantly in technology, which has boosted the customer experience.
Anh emphasised that Techcombank manages and issues bonds only to financially strong entities with reliable repayment capabilities. While Techcombank has a significant volume of bond issuances, there have been no defaults on interest or principal payments.
CEO Jens Lottner provided further insight into Techcombank's 2022 business operations, noting that global and domestic economic impacts had significantly affected the bank's performance.
He acknowledged that Techcombank, as a prominent player in the corporate bond market, had not been immune to market volatility, particularly during bond market downturns. The bank's current and savings account deposits have also been affected.
Despite these challenges, Techcombank remains committed to providing diversified and innovative financial solutions to its customers, while maintaining a strong focus on risk management and financial stability.
Lottner stated that the pre-tax profit target will be set at VND22 trillion, a decrease of 14 per cent compared to the previous year. The bank aims to raise capital in line with actual credit growth to optimise funding sources, with an expected non-performing loan ratio of less than 1.5 per cent.
He said that despite the challenges posed by the projected GDP growth of 6-7 per cent, Techcombank's strategy remains unchanged, focusing on retail segments and digitalisation.
He noted that the bank shifted its focus towards retail rather than large enterprise segments last year, and would make further adjustments to better manage real estate risks going forward.
“Regarding corporate bonds, Techcombank manages them on a sustainable and cautious basis, ensuring compliance with the State Bank of Vietnam’s safety ratios. Its capital adequacy ratio (CAR) is 15.2 per cent, significantly higher than the Basel II requirement of 8 per cent. Additionally, various other indicators demonstrate the bank's prudence and compliance with regulatory requirements,” he said.
In addition, Lottner also explained Moody’s downgrade decision on Techcombank.
“Moody's is an independent rating agency and therefore, we completely respect they are an independent assessment and that is their function in the market. But that doesn't mean that we need to agree with the downgrade,” he said. “We were upgraded in September 2022 and were the only bank with such a robust intrinsic value rating. This upgrade status conferred on us a position above all other players in the market. Regrettably, the downgrade was not attributed to any of the liquidity ratios, solvency ratios, or other reasons for the upgrade, as none of these metrics had declined, but instead remained the same or improved. The rationale behind the downgrade was due to the negative perception regarding the real estate market in Vietnam, which was deemed challenging.”
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