Techcombank's leaders answered questions from shareholders at the bank’s annual general meeting of shareholders in Hà Nội on Saturday. Photo courtesy of the bank

HÀ NỘI — Techcombank set a profit target of VNĐ27.1 trillion (over US$1 billion) this year, increasing 18 per cent over 2023 despite its conclusion that the market still faces many potential difficulties in 2024.

The information was announced at the bank’s annual general meeting of shareholders (AGM) in Hà Nội on Saturday.

It also expected outstanding loans of VNĐ616 trillion, posting 16 per cent year-on-year increase while bad debt ratio is set to be controlled below 1.5 per cent in 2024.

Despite facing numerous market challenges, Techcombank achieved a stable total operating income (TOI) in 2023. This can be attributed to the growth in fee income and the expansion of its customer base. Moreover, the bank’s before-tax profit surpassed expectations, reaching nearly VNĐ22.9 trillion, which was 4 per cent higher than the planned target. This impressive performance was primarily due to their effective control of operating costs. Additionally, Techcombank boasts one of the industry's lowest bad debt ratios, standing at 1.2 per cent. Their capital adequacy ratio (CAR) at the end of 2023 was 14.4 per cent, the second highest among all Vietnamese banks.

In terms of retail customers, Techcombank's advanced digitalisation capabilities and partner ecosystems have played a pivotal role in attracting 2.6 million new customers by 2023. This significant influx of customers has contributed approximately VNĐ6.7 trillion to the growth of their current account and savings account (CASA). By focusing on attracting new customers and establishing key banking relationships, Techcombank has successfully increased their CASA balance by 37 per cent. As a result, their CASA ratio reached 40 per cent by December 31, 2023, supported by favourable year-end factors from corporate customers.

According to General Director Jens Lottner, based on the groundwork laid in 2023 and the projections for 2024, the board of directors at Techcombank were confident of accomplishing this objective. Furthermore, the bank holds a strong belief in attaining its target of keeping bad debt below 1.5 per cent, a level that is deemed robust when compared to its industry counterparts.

After a decade of accumulating profits to reinvest in business activities rather than distributing dividends, Techcombank planned to pay a cash dividend of VNĐ1,500 per share, which is the highest among all banks that have made similar announcements. To facilitate this dividend payment, the bank planned to allocate over VNĐ5.2 trillion from its undistributed profits by the end of 2023. The payment would be implemented in the second or third quarter of 2024.

Hồ Hùng Anh, Chairman of the Board of Directors said the decision to change the dividend payment policy was based on a comprehensive evaluation of profit potential, capital position and anticipated policy changes.

The bank's leader was confident that they could sustain their revenue and profit growth rates, as well as maintain safety ratios as outlined in their proposed strategy, while still being able to provide cash dividends to shareholders.

Techcombank's Board of Directors also proposed increasing the bank's charter capital from its current level of more than VNĐ35.2 trillion to over VNĐ70.4 trillion through the issuance of shares derived from equity capital.

The owner's capital includes undistributed after-tax profits, the reserve fund designated for supplementing the charter capital, and the surplus from shares, all of which are based on the separate audited financial statements and Techcombank's audited consolidated financial statements for 2023. The anticipated release rate for these funds is set at 100 per cent, according to the chairman.

In the fourth year of its five-year strategy (2021-25), Techcombank will focus on three key areas to establish new growth positions. These include increasing balances and CASA ratios, promoting major transaction banking relationships, diversifying the credit portfolio to target individual customers and small-and-medium sized enterprises (SMEs), and expanding income from service activities through improved business models with diverse and suitable products.

Anh said Techcombank had demonstrated its adept management capabilities by successfully navigating the challenging years of 2022 and 2023.

“The bank has maintained a strong track record in the bond market, ensuring that no bonds experience any delays in interest or principal payments, thereby safeguarding the interests of its customers. By investing in technology and leveraging data, Techcombank has effectively reduced operational costs, enabling the bank to expand its presence in previously weaker segments such as SMEs, mass customers, unsecured loans and consumer loans. The adoption of technology has also facilitated rapid advancements in risk and cost management,” he added.

Looking ahead to 2024, Techcombank approaches the year with a cautious plan due to anticipated challenges. The bank aims to consolidate its strengths, harness the power of data and technology, and strategically penetrate other economic sectors to drive effective growth while maintaining robust risk control. —VNS