Techcombank (TCB) set a cautious pre-tax profit target of VND22 trillion (US$936.5 million) this year, a drop of 14 per cent over the previous year.
This was announced at the bank’s annual general meeting held in Ha Noi on Saturday.
Accordingly, Techcombank also approved a credit balance target of more than VND511.2 trillion, posting a 15 per cent year-on-year increase. Capital mobilisation would be in line with actual credit growth to optimise mobilisation sources. Meanwhile, the non-performing loan (NPL) ratio is expected to be lower than 1.5 per cent.
According to Techcombank’s General Director Jens Lottner, with GDP growth forecast at 5-6.5 per cent, the economy would still face many difficulties. However, Techcombank's strategy remains unchanged, focusing on the retail segment and promoting digitalisation.
He said that last year Techcombank had focused a lot on retail and not much on the big business segment. In the future, it would make moves to better control risks from real estate.
He believed that the Vietnamese economy is facing many potential difficulties due to both domestic and international situations. Although market liquidity has shown signs of improvement compared to the end of last year, the interest rate is still high. Credit and deposit growth were both very low. Similarly, demand in investment markets such as bonds remains low. These are unfavourable factors for the entire banking industry in 2023.
In that context, Techcombank did not choose to race for growth or profit, but chose to continue to strictly control credit quality, and improve risk and fraud management. That is also the reason why Techcombank's profit target for 2023 was set lower than the previous year.
He added that in the 5-year strategy (2021-25), Techcombank has clearly set out three main pillars in the bank's transformation and development process, including “Digitalisation, Data and Talent”.
It is the reason that the year 2023 would be the tipping point of the transition. Over the past two years, the bank has focused on building foundational capabilities such as implementing new core platforms such as cloud computing, building and upgrading databases that excel across the banking industry. Techcombank is now ready to transform, the CEO said.
Answering shareholders’ questions on paying dividends, Techcombank Chairman Ho Hung Anh said that the dividend payment by share plan will be implemented if the bank needs to improve its indexes.
As for the dividend payment in cash, Anh revealed that 2023 may be the last year Techcombank does not pay dividends in cash.
He said that the TCB stock price could be "five times or 10 times higher than the current price" and "if it is a long-term investment, there is nothing to be worried about".
The bank plans to issue nearly 5.3 million shares in the Employee Stock Options Programme (ESOP) at the price of VND10,000 per share this year. After the successful issuance, the bank's charter capital is expected to increase to more than VND35.2 trillion. The newly issued shares are subject to transfer restriction for one year from the end of the issuance.
The issuance is expected in 2023 after being approved by the State Bank of Viet Nam and the State Securities Commission. The total proceeds after the issuance are expected to be used to supplement the bank's working capital.
He said the bank’s business results in the first quarter of 2023 exceeded the set plan but they always emphasised caution. Techcombank always makes high provisions and promotes risk management. It was the first bank to finish handling debts at Viet Nam Asset Management Company (VAMC).
Techcombank also planned to deduct VND32.6 trillion for the reserve fund to supplement charter capital. The deduction aims to serve the plan to increase charter capital at an appropriate time. In addition, the bank will deduct VND1,791 billion for the financial reserve fund and VND38 billion for the welfare fund. After setting aside funds, Techcombank's distributable profit is more than VND23.5 trillion. — VNS