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Rating Action: Moody's upgrades Techcombank's rating to Ba2 from Ba3; changes outlook to stableGlobal Credit Research - 07 Sep 2022Singapore, September 07, 2022 -- Moody's Investors Service has upgraded Vietnam Technological and Commercial Joint Stock Bank's (Techcombank) long-term local and foreign currency deposit and issuer ratings to Ba2 from Ba3. Moody's also upgraded the bank's Baseline Credit Assessment (BCA) and adjusted BCA to ba2 from ba3.At the same time, Moody's changed the outlook on Techcombank's ratings, where applicable, to stable from positive.For detailed list of affected ratings for Techcombank, please refer to the end of this press release.RATINGS RATIONALEToday's rating action on Techcombank reflects its strong standalone creditworthiness and the upgrade of Vietnam's issuer rating to Ba2 from Ba3 on 6 September 2022. Prior to this rating action, Techcombank's BCA and ratings were constrained by Vietnam's previous sovereign rating of Ba3 given the bank's significant exposure to the government in common with other Vietnamese banks. For more information on the sovereign credit rating action, please refer to the Government of Vietnam issuer page on www.moodys.com.Asset quality remained broadly stable despite the pandemic, with gross non-performing loan (NPL) ratio increasing modestly to 0.7% as of the end of 2021 from 0.5% a year earlier. Loan loss coverage was also high at 163% as of the end of 2021. Nevertheless, the bank's credit concentration in real estate and construction- related loans remains a risk for its asset quality.Capital and profitability are Techcombank's key credit strengths. Capital, as measured by tangible common equity to Moody's-adjusted risk weighted assets, was 13.6% as of the end of 2021, one of the highest among Moody's rated Vietnamese banks. Moody's expects Techcombank's capital to be stable over the next 12 –18 months because asset growth will be supported by its strong profitability. The bank reported a return on tangible assets of 3.3% in 2021.Techcombank's funding is solid, with moderate reliance on market funds. However, its high stock of liquid assets mitigates the associated risks.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSAn upgrade of Techcombank's long-term ratings is unlikely because they are at the same level as Vietnam's Ba2 sovereign rating.The long-term ratings of Techcombank could be downgraded if there is a severe deterioration in its credit fundamentals, including a significant increase in its stock of problem loans leading to a drop in profit and capital erosion.The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://ratings.moodys.com/api/rmc-documents/71997. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.Vietnam Technological and Commercial Joint Stock Bank (Techcombank), headquartered in Hanoi, reported total assets of VND569 trillion as of 31 December 2021...Issuer: Vietnam Technological and Commercial Joint Stock Bank.... Adjusted Baseline Credit Assessment, Upgraded to ba2 from ba3.... Baseline Credit Assessment, Upgraded to ba2 from ba3.... Long-term Counterparty Risk Assessment, Upgraded to Ba1(cr) from Ba2(cr).... Long-term Counterparty Risk Rating (Foreign and Local Currency), Upgraded to Ba1 from Ba2.... Long-term Issuer Rating (Foreign and Local Currency), Upgraded to Ba2 from Ba3, outlook changed to stable from positive.... Long-term Bank Deposit Rating (Local and Foreign Currency), Upgraded to Ba2 from Ba3, outlook changed to stable from positive.... Short-term Counterparty Risk Assessment, Affirmed NP(cr).... Short-term Counterparty Risk Rating (Foreign and Local Currency), Affirmed NP.... Short-term Issuer Rating (Foreign and Local Currency), Affirmed NP.... Short-term Bank Deposit Rating (Foreign and Local Currency), Affirmed NP....Outlook, Changed To Stable From PositiveREGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found on https://ratings.moodys.com/rating-definitions.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website https://ratings.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on https://ratings.moodys.com.Please see https://ratings.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Rebecca Tan VP-Senior Analyst/CSR Financial Institutions Group Moody's Investors Service Singapore Pte. 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