Techcombank’s profit rises 22%, CASA up for 3rd straight quarter

A client conducts a transaction at an office of Techcombank. — Photos courtesy of Techcombank

HÀ NỘI — Techcombank on Tuesday announced its financial results for the fourth quarter, ending 31 December 2023.

“Techcombank performed strongly in the last quarter of 2023 and delivered on all components of our full-year financial guidance. New customer acquisition accelerated to 2.6 million for the year, and Techcombank now serves over 13.4 million customers nationwide,” said Jens Lottner, Techcombank CEO.

Total operating income (TOI) and profit before tax (PBT) increased 18 and 22 per cent year-on-year respectively in the last quarter of 2023, giving Techcombank positive momentum as it moves into 2024.

The bank’s credit growth reached 19.2 per cent, and the core Current Account Savings Account (CASA) balance rose for the third consecutive quarter, reflecting positive customer responses to initiatives that make Techcombank their primary banking relationship. This, coupled with favourable year-end seasonal effect, brought the CASA ratio to nearly 40 per cent by the end of the year.

“While some headwinds may remain as we move into 2024, I am confident that our transformation strategy and established market-leading digital capabilities mean that Techcombank is well-placed for the future. Thus, we will submit to the upcoming AGM the proposal for a cash dividend policy, as a part of our continued long-term value creation for shareholders,” he added.

In 2023, net interest income (NII) declined by 8.6 per cent year-on-year to VNĐ27.7 trillion. The last quarter witnessed a strong year-on-year (YoY) turnaround in NII, which grew 11.4 per cent after three quarters of contraction.

Ample liquidity in the system and lower interest rates facilitated an improvement in Cost of Funds (CoF) to 4.2 per cent in the last quarter of the year, compared to 4.7 per cent in the previous quarter and 5.4 per cent in second quarter.

However, the favourable impacts on Net Interest Margin (NIM) in the last twelve months were offset by softened asset yields due to intense competition on loan pricing, as well as the temporary impact of a higher credit balance at the end of the year.

Outside Techcombank headquarters on Lý Thường Kiệt Street, Hà Nội.

Individual performance by product for the full year was as follows:

Cards (VNĐ2.1 trillion, up 33.7 per cent YoY): growth in credit card fees was driven by continued high purchase volumes (+28.6 per cent YoY) and new instalment volumes (+29.4 per cent YoY).

Strong value propositions, including Signature and Platinum cards tailored to each customer segment, allowed the Bank to affirm its leadership in several card payment metrics, including digital wallet, cross-border, credit and debit card payment volumes, as acknowledged by VISA and Mastercard.

Letters of Credit (LC), Remittance and Other cash & settlement (VNĐ4.5 trillion, up 81.5 per cent YoY): the Bank continued to reap the benefits from its extensive digitisation of customer journeys, including innovative digital-led trade and supply chain financing, payment and collection solutions (SmartPOS for FnB, FMCG and Electrical Goods customers; real-time digital signatures, QR247) and cash and liquidity management solutions.

FX sales (VNĐ995.7 billion, up 9.2 per cent YoY): In 2023, greater volatility in the FX market drove up demand for FX hedging (up 18.2 per cent YoY), while FX flows remained steady (up 6.3 per cent YoY).

Banca fees (VNĐ667.3 billion, down 61.9 per cent YoY): the fourth quarter’s banca fees showed strong recovery, up 25.2 per cent quarter-on-quarter (QoQ), lifting FY23 APE to VND 928.0 billion (-36.9 per cent YoY).

Amid persistent challenges in the industry, Techcombank’s commitment to a need-based selling philosophy and its pro-active approach to re-designing customer journeys and delivering compelling products has proven effective.

The bank was, therefore, able to maintain No.1 APE in the industry for four consecutive months during September-December 2023.

IB fees (VNĐ1.8 trillion, down 29.0 per cent YoY). The annual decrease was primarily driven by a challenging first half of the year, whereas the second half of 2023 saw a commendable recovery.

In the fourth quarter, IB fees posted VNĐ632.3 billion, up 135.8 per cent YoY and 4.1 per cent QoQ.

A differentiated digital-led approach to brokerage, coupled with compelling propositions allowed Techcom Securities (TCBS) to significantly increase its market share on the Ho Chi Minh Stock exchange, accounting for 7.6 per cent of trades (vs. 6.8 per cent in third quarter of 2023, and 5.2 per cent in fourth quarter 2022). With this, TCBS emerged as the third largest broker in terms of market share and continued to lead the industry in profitability.

Net income from other activities, excluding recoveries, in 2023 reached VNĐ1.4 trillion, with VNĐ372.6 billion net expenses in 2022. This was primarily driven by gains on trading and on the sale of the Bank’s legacy Hanoi headquarters building in first quarter 2023.

Recoveries stood at VNĐ831.8 billion, down 36.6 per cent YoY, of which VNĐ311.9 billion was collected in the last quarter of 2023

In 2023, operating expenses edged up modestly to VNĐ13.3 trillion, up 1.8 per cent YoY, with Cost-to-Income Ratio (CIR) of 33.1 per cent. Operating expenses in the last quarter were down 7.8 per cent YoY, on the back of rigorous cost management.

Provision expenses in 2023 increased 102.5 per cent YoY, reflecting the expected progression of non-performing loan balances and the Bank’s pro-active asset management approach. The Bank’s credit cost remained well controlled at 0.8 per cent. — VNS