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Digital, data, and human excellence key to Techcombank’s transformation journey: CEO Jens Lottner



Hanoi-headquartered Techcombank recorded another year of stellar financial performance and growth in 2021, while continuing to support its customers, employees, and communities in Vietnam impacted by the COVID-19 pandemic.

As the recovery of the Vietnamese economy gathers pace in 2022, Techcombank’s investments in its digital platform, data analytics, and the talent of its people have laid a strong foundation to capitalize on growing demand for banking services, according to Jens Lottner, CEO of the lender.   

In 2021, the bank posted VND37.1 trillion (over US$1.6 billion) in total operating income, up 35.4 percent year on year.

The bank’s profit before tax (PBT) rose to VND23.2 trillion ($1 billion), making Techcombank the first private lender to join Vietnam’s ‘billion-dollar profit’ club. 

This achievement was the culmination of five consecutive years of double-digit PBT growth, at a compound average growth rate (CAGR) of an impressive 50 percent between 2016 and 2021. 

The bank’s performance remained resilient even as COVID-19 cast its shadow over local markets and several waves of infections caused disruption to businesses and people’s lives.

Despite these challenges, Techcombank grew its total assets by 29.4 percent to VND568.7 trillion ($24.6 billion) and delivered an ‘industry-leading’ return on assets of 3.7 percent, according to the bank.

It was also able to maintain an impressive current account and savings account (CASA) ratio, which reached 50.5 percent at the end of 2021.

Its capital adequacy ratio (CAR) was 15 percent, while the non-performing loans ratio (NPL) stood at 0.7 percent, and the loan loss coverage ratio (LLC) fetched 162.9 percent.

Underpinning Techcombank’s performance and enabling the resilience of its business model were ongoing investments in technology, scaling up data, and developing human capital, CEO Lottner explained.

In a candid interview, Lotter talked in detail about the trends and dynamics impacting the banking industry in Vietnam and how Techcombank is transforming itself to be ready for a digital future.

The bank witnessed strong profit growth in 2021. Does the 16 percent growth target for 2022 seem too cautious?

From 2015 to 2021, our PBT grew at a CAGR of around 50 percent. As we scale, the bank will reach a size where we won’t be able to grow at 50 percent every year. We set a target of 16 percent, which we feel is highly achievable, and note that this still means VND4 trillion [$173.2 million] more than last year. Is more than that possible? Yes certainly, we could achieve 40 percent growth this year if Vietnam’s economy continues to recover and the tailwinds are favorable, but not everything is in our control.     

How about your $20 billion market cap target by 2025? Isn’t the market correcting?

If you see our current trajectory, the way our earnings are increasing and the potential for growth as the Vietnamese economy recovers, I think at the end of 2025, we could easily be at around $8 billion equity value. And our pre-tax earnings could be above $2 billion if we continue on our current growth trajectory. If you have these numbers, the question is then on what multiple are we trading? If you look at banks across the region that are showing the types of numbers we have in terms of the growth and return on assets, they usually trade at 3-4 times book. Based on these, multiples are ahead of our plan. We achieved what we wanted for 2022 already in 2021.

To get there, you seem to be betting big on technology. Please take us through your technology investment.

One of the priority areas in which we are investing is our transaction banking capability through our digital mobile app. We want to bring differentiation to the app through the application of data analysis, so for example, if you are a new-to-bank customer we can still underwrite you by quickly developing a credit score that uses up to six external data sources. The ability to interact with customers, understand them, and provide tailored financial solutions to meet their needs through our app, just as we would do in a branch, is the customer experience we want to create. Our plan is to have five million customers migrate completely onto the digital platform by the end of this year. We currently have around 400 people working on enhancing these digital capabilities.

Jens Lottner, CEO of Techcombank. Photo: Supplied

Jens Lottner, CEO of Techcombank. Photo: Supplied

We have set aside $500 million for tech investments over the next five years. Up to now, we have deployed around 15-20 percent of that total amount, but we expect to see an acceleration of our investment in the years ahead as we implement larger-scale technology initiatives. We are committed to deploying this capital responsibly and in ways that will help to transform the bank, make us more efficient, and give our customers the best digital experience possible. 

Within the tech categories, Techcombank seems to be very aggressive in data. We’ve heard you’re building a data lake, can you tell us more?

Our data lake initiative involves collecting and aggregating data from different areas in the bank, and because it’s so big, we have decided to put this ‘data lake’ on the cloud. We have identified the data set we want to store in the cloud, and around 70-80 percent of the data has now been transferred. We are also building an analytics infrastructure to enable us to analyze the data to better understand our customers, provide a more holistic view of their needs, and enable the bank to make better and faster decisions over the types of products and services to offer. The next step will be to connect our app to the data lake infrastructure so that we make better decisions across all of our customer engagement channels.

What makes Techcombank’s mobile app different from those of other banks?

We want our mobile app platform to not just be a service platform, but to have the feeling of a real human interaction that understands what a customer needs. That human interaction, when it comes at the scale of 15 million or 20 million customers, will only work if you connect a lot of different elements, from infrastructure, to data systems and front end systems and employ machine learning.

We also want to provide customers with an experience that is seamless across our different channels, from the branches to our digital platform. There are probably only a handful of banks in the world that are anywhere close to offering this type of seamless experience for their customers and I think it will be a focus for many banks for the next 10-15 years. Look at Google, every single time more people are using it, it learns more and becomes even better. It’s a virtuous cycle that is very hard to replicate.

What do you make of the level of digitalization by Vietnamese banks, compared to others in the region? What changes need to be made in terms of regulations when it comes to data protection in the cloud?

I think we are 5-10 years behind compared to where banks in other markets are, but we are catching up fast. The main differences are in the technology stack. How scalable are the systems? How easy is it to make changes and to create new capabilities? How long does it take to get to market? A lot of the systems used by Vietnamese banks are very tightly integrated and this makes it harder to create new customer experiences, compared to what we see in other markets.  

In terms of the legal frameworks, I think that the local regulator, in certain areas, is much more open than others. For example, moving to the cloud would have been much more difficult in Singapore, Thailand or Malaysia. People might say maybe we are too laxed with data privacy, but that’s not true. If you look at how much money AWS, Google, and Microsoft are investing to strengthen their data protection, it’s much safer to be up in the cloud than somewhere in a local data center. From that perspective, I think the regulator has the right perspective in terms of what they are intending to do.

However, probably some of the legal frameworks need to be enforced. If there is a stronger sandbox regime, where people can test things in a lot of areas, it would be much more helpful. Through this sandbox regime, and through working with the banks, we could come up with the solutions. If the banks can make the right case, regulators are willing to entertain us. It can be only on a pilot level in the beginning, but regulators understand that they need to do something.

Throughout your transformation process, you’re beefing up the team with a lot of overseas hires. How will it change the bank’s performance?

There are certain skills and capabilities we need, which we believe are not in country. But everyone who’s coming here has a very clear mandate to pass down his or her experience to the staff. Ultimately, we will not be able to rely on constantly importing talent. Within Techcombank, we’re not making such a big differentiation between local and foreign experts, or returning overseas Vietnamese. A lot of the people we’re having now are really building a career with the bank. On the other hand, as we start transforming, our aspiration is to become one of the leading banks in ASEAN. So for a lot of experts, this becomes a very different proposition for them. They are excited by the growth, and the quality of work and the people they’re working with.



Upgrading the market for the sake of all participants




An employee passes electronic boards showing share prices inside Hồ Chí Minh Stock Exchange in HCM City. — VNA/ Photo Hữu Khoa

HÀ NỘI — An upgrade to emerging status will not only help the stock market develop quickly, transparently and sustainably, but also attract huge foreign capital inflows, said experts. 

Recently, the Government has directed to purge the market and improve the trading system’s capacity, showing its determination to enhance the quality of the stock market.

The refinement is to protect investors and open a door for the Vietnamese stock market to be upgraded from a frontier to an emerging market.

Prime Minister Phạm Minh Chính has taken an interest in the development of the capital market and the stock market, including the matter of upgrading the market. 

During a trip to attend the ASEAN-US Special Summit, on May 16, the PM visited the New York Stock Exchange (NYSE) – the largest stock exchange in the world – hoping it supports and shares experience to develop an effective and sustainable stock market in Việt Nam, and successfully build a regional financial centre. 

PM Chính also expected the NYSE and its Vietnamese partners to foster a sustainable, mutually beneficial partnership, contributing to making the Việt Nam-US comprehensive partnership more substantive and effective.

On the occasion, PM Chính witnessed the awarding ceremony of two cooperation documents in the fields of finance, banking and investment funds between Vietnamese and US partners, including a cooperation document between the Vietnamese State Securities Commission (SSC) and the NYSE regarding support to upgrade the country’s stock market and build a mechanism for investors to participate in both stock markets.

Previously, the PM chaired a conference on developing a safe, transparent, efficient and sustainable capital market to stabilise the macro-economy and ensure major balances of the economy.

At the conference, PM Chính also asked the Ministry of Finance to immediately solve the order congestion situation and invest in technological innovation and digital technology application, while urgently implementing measures to upgrade the market from frontier to emerging status to attract investment capital, especially foreign investment.

Dominic Scriven, head of the Việt Nam Business Forum’s (VBF) Capital Markets Working Group, said that the move to purify the market is a great effort and determination from the Government.

As the goal is to build and develop a safe, transparent and sustainable securities market, cleansing the market will ensure the interests of businesses and genuine investors, increase the stock market’s appeal, and attract more investment capital flows both at home and abroad.

Meanwhile, Phạm Lưu Hưng, chief economist of SSI Securities Company (SSI), said that the move to purge the market in recent years raised expectations that the upgrade process will be easier. Hưng hoped that in the next assessment, the Market Rating Organization (MSCI) will note some positive comments about what Việt Nam has done.

According to Minister of Finance Hồ Đức Phớc, the ministry is currently working with international organisations to deploy solutions to upgrade the stock market by 2025 as per the set roadmap.

Huge foreign capital inflows

Analysts believe that the upgrade from frontier to emerging status will be an important driving force for the market.

Zafer Mustafaoglu, World Bank (WB) Practice Manager for Finance, Competitiveness and Innovation (FCI) for East Asia and Pacific, said that the capital market development is a long-term effort, and there is still much work to be done in Việt Nam.

Upgrading to emerging market status is not only an improvement in position, but also signals strong enhancement in quality with a solid market foundation.

Upgrading to an emerging market also attracts the attention of high-ranking international investors to Việt Nam. In the stock market, upgrading to an emerging market could result in an additional US$10 billion in new investment for the country. The first year alone can receive an additional $2-5 billion.

According to Nguyễn Minh Tuần, General Director of AFA Capital Investment JSC, the criteria for upgrading from frontier to emerging status focus on two main factors – size and liquidity of the market (quantitative) and market access (qualitative).

In terms of size and liquidity, there are four criteria which are the number of companies included in the Standard Index, total market capitalisation, floating capitalisation and market liquidity. Việt Nam has almost met three standards, he said. 

The main issue is qualitative standards. In the latest ranking in June 2021, there are nine criteria that the country has not yet met, including the ownership rate, ownership restrictions and equal rights of foreign investors.


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EVN accelerating projects to gear up for hot season




EVN workers checks electricity equipment. — VNA/  Photo

HÀ NỘI — Vietnam Electricity (EVN) said it is accelerating power generation and grid projects, especially urgent infrastructure, to ensure supplies in the hot season.

The State-owned group said in the first four months of 2022, the firm and its subsidiaries had started work on 30 projects and put into use 31 grid facilities between 110kV – 500kV.

It cited meteorological forecasting centres as saying that heatwaves this year are likely to appear in the northern and central regions later than usual, but won’t be too severe.

Power demand in the north is unlikely to rise sharply in May, and daily consumption will be around 805 million kWh.

EVN noted that this month, it is working to guarantee supply for production and business activities as well as daily life, especially the 31st Southeast Asian Games (SEA Games 31) and the 15th National Assembly’s third session.

It is maintaining high water levels at multi-purpose hydropower plants in the north, operating thermal power plants in the region, and importing about 540MW of electricity in May.

Its subsidiaries were also requested to ensure power supply in the dry season, ready manpower and equipment for any possible incidents due to natural disasters, and recommend people, agencies and factories use electricity in a safe and economical manner.

In April, the entire EVN system produced 22.62 billion kWh of electricity, up 1.9 per cent year-on-year. That added up to a four-month figure of 85.65 billion kWh, increasing 6.2 per cent. —


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Deputy Finance Minister Nguyễn Đức Chi takes charge of the State Securities Commission



Deputy Finance Minister Nguyễn Đức Chi. — Photo

HÀ NỘI — Minister of Finance Hồ Đức Phớc had assigned Deputy Finance Minister Nguyễn Đức Chi to take charge of the State Securities Commission (SSC) from May 19.

In a dispatch to the SSC, Minister Phớc stated that Deputy Minister Chi will manage the commission during the consideration and completion of personnel for the commission.

Earlier on May 18, the Party Central Committee’s Inspection Commission announced the inspection conclusions and Party disciplinary measures on the SSC Party Committee in the 2015-20 tenure and relevant individuals. Right after that, the Ministry of Finance directed the SSC, stock exchanges, the Việt Nam Securities Depository and relevant agencies to review and implement measures to remedy the violations and shortcomings.

Specifically, the ministry dismissed Trần Văn Dũng from the position of the Chairman of the SSC, while giving a warning to Vũ Bằng, former secretary of the SSC Party Committee in the 2015-20 tenure and former SSC Chairman.

Warnings were given to Nguyễn Thành Long, secretary of the Hà Nội Stock Exchange Party Committee; and Nguyễn Sơn, chairman of the management board of the Việt Nam Securities Depository for their wrongdoings during their tenures. —


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