Techcombank eyes more business clients amidst 'challenging' second half

Vietnam’s fourth-largest bank by assets seeks to expand in Ho Chi Minh City and surrounding regions.

Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the Southeast Asian nation’s biggest bank that is not state-owned, seeks to capture more business clients as it braces for slower profit growth in the second half.

“There are big opportunities in the merchant segment and in the southern region,” Alexander Macaire, the publicly listed lender’s chief financial officer (CFO), told Asian Banking & Finance in an interview.

“That's a segment in which we are underpenetrated, and it also means we can continue to capture a higher share of all transactions in Vietnam,” he added.

Techcombank is looking to expand in Ho Chi Minh City and surrounding regions, where the lender has fewer customers. The bank had 14.4 million retail and corporate clients at the end of June.

The expansion comes when Techcombank expects “some headwinds” on its net interest margin due to stiffer competition and a soft property market that could limit the interest rates it charges on customers.

“Therefore, we have advised our investors that they should not expect our growth rate to stay at the same level for the second half of the year,” Macaire said. “We are, however, confident that we will be able to achieve and hopefully exceed the full-year target of 18% profit growth that we have communicated on our AGM.”

Vietnam’s economic growth unexpectedly quickened to 7.4% in the third quarter, buoyed by manufacturing and exports, before a super typhoon in September damaged crops and prompted warnings of a challenging end to the year. 

Its banking system has reported strong profit growth this year, but lenders face defaults from struggling property developers. The arrest and conviction of property tycoon Truong My Lan and related bank run involving Saigon Commercial Bank in 2022 had exposed corruption, fraud, and regulatory violations in the sector, although swift action by the central bank has contained most of the fallout, according to S&P Global Ratings. 

Techcombank seeks to boost assets by as much as 20% in the next 18 months by improving its digital banking platform and adopting emerging technologies such as artificial intelligence (AI). 

The bank may also diversify its credit books beyond real estate. To do this, it is expanding retail loans and developing corporate banking products in sectors including fast-moving consumer goods, automotive, travel, utilities, and finance and insurance.

Better customer support
Macaire said AI would be the “cornerstone” of Techcombank’s transformation. “We have been preparing the groundwork for its integration for the past three years. This involved consolidating our data into what we call a ‘data brain,’ migrating it to the cloud, cleaning it and organising it for effective use.”

He added that they use machine learning to study about five billion data points they collect daily to give customers more personalized services. One of Techcombank’s AI-related projects is a personalised digital agent that, once integrated, will help its relationship managers with day-to-day tasks.

“We also already have AI bots analysing in real time the conversations our call centres are having with our customers, analysing their tone, the mood of the customer, and preparing reports that can be reviewed by management so that we can optimise our customer support,” Macaire said.

The bank, one of the dominant wealth managers in Vietnam, is also optimising customer support for its wealth business. Macaire said more than 50% of affluent Vietnamese have a bank account with Techcombank. 

“We are the largest wealth bank by [assets under management] and we are also number one among banks for equity and bond brokerage,” he pointed out.

The lender, however, is not about to change its overall business model, Macaire said, touting its latest financial results.

Techcombank’s net income grew by 39% to VND6.27t in the second quarter from a year earlier, bringing its first-half earnings to VND12.55t, up 38.8%, according to its financial statement posted on its website. Its bad loan ratio was 1.28% at end-June.

Net interest income rose by 50.6% to VND9.48t in the second quarter from a year earlier. Macaire attributed this to Techcombank’s strong deposit base that is about twice as high as the market average.

“It allows us to enjoy a low cost of funds, and this gives us a lot of flexibility to be selective over the risks we want to underwrite,” he added.

‘Poster child of Southeast Asia’
Techcombank’s expansion goals are in line with what Macaire sees as the most exciting things about Vietnam’s banking sector — its fast growth and big market potential. 

“For me, this country has everything it needs to become a poster child of Southeast Asia, and successfully transform itself into an advanced technology-led economy, which would be an unprecedented achievement for the region,” said Macaire, a former CFO for HSBC’s Wealth and Personal Banking business in Asia and a former employee of the French Finance Ministry.

"Mobile banking adoption is very high, whilst penetration remains quite low across a number of products, including mortgages, loans, bank, insurance, bonds and funds,” he said. “All the conditions are there for the continued expansion of banking services and wealth management in particular.”

Macaire looks forward to 2025, as Techcombank seeks to boost its market share and consolidate its digital lead. “We’re building on the current momentum and the investments we've made in data and technology.”