Vietnam’s Techcombank eyes global talent and investors for Asean ambitions

[HANOI] Techcombank – the second largest private bank in Vietnam – has been going on a hiring spree of late as it expands headcount for its technology, digital and data roles.

The bank, which has assets of over 927 trillion dong (S$48.9 billion), has tripled the number of data scientists, analysts, engineers and IT-related staff on the payroll to 1,600 – from 500 in 2020. The current total accounts for 15 per cent of the workforce, from just 5 per cent in 2020.

Techcombank’s chief executive officer Jens Lottner said that plans are on track to grow this share to 25 per cent of the workforce in the next five years.

Headquartered in the capital Hanoi, Techcombank serves more than 14.8 million customers and runs a nationwide network of some 315 branches.

As one of few foreign CEOs of a Vietnamese bank, Lottner – a German finance veteran who has taken the role since Aug 2020 – knows a thing or two when he described Techcombank as offering global talent “a startup at scale”. In other words, this means combining the spirit of a technology-enabled startup with the substantial impact of a major financial institution in Vietnam. 

The bank has expanded its global recruitment efforts over the past two years, targeting Vietnamese expatriates and foreign talent in more advanced markets such as Singapore, the UK, Australia and the US.

It has held numerous overseas roadshows annually to attract professionals with international expertise, particularly from the global community of more than five million Vietnamese expatriates, as part of the lender’s ambition to become a leading bank in South-east Asia, said Lottner.

“We need those who can help fuel our aspirations and train the next generation,” he said in an interview with The Business Times.

He highlighted the shortage of local talent in critical areas such as digitalisation and data analytics – two key pillars of Techcombank’s 2021-2025 transformation plan.

In the past two years, the lender has recruited more than 40 professionals with 10 to 15 years of experience from a pool of 5,000 people engaged through the global roadshows.

A key challenge is acclimating these newcomers to Vietnam’s dynamic and rapidly evolving banking sector, driven by an economy that’s growing at around 7 per cent annually, said Lottner. 

“For many of them who are coming back, they need to appreciate speed, time to market, size, and aspiration. It is a little bit of a mindset opening more than anything else,” he said.

In the nine months to September this year, the bank’s total operating income rose nearly 29 per cent from a year ago to 37.4 trillion dong. It reported a pre-tax profit of 22.9 trillion dong, up nearly 34 per cent.

Data: a key pillar

With a commitment of US$500 million to technology investments in its 2021 to 2025 agenda, Techcombank has migrated about 50 per cent of its workload to the cloud, significantly surpassing the 15 per cent average reported among 100 global banks in a 2022 Accenture study.

As part of this process, the Vietnamese lender also actively collects and refines high-level customer data, handling about five billion data points daily while leveraging real-time data streaming.

“We have invested a lot of time on data, which right now helps us significantly in accelerating a lot of these things when it comes to artificial intelligence,” Lottner said.

Regional ambitions

As Techcombank enters the final year of its five-year plan, its ambition to rank among South-east Asias most valuable banks is coming into sharper focus.

The bank is also seeking new strategic investors, prioritising partnerships that offer more than just capital. Lottner said a 15 per cent share package could become available for foreign investors if Warburg Pincus opts to divest its 8 to 9 per cent stake in the near future.

This year, Techcombank’s shares have surged more than 42 per cent, significantly outperforming the country’s key barometer, the VN Index’s 8 per cent rise, reflecting growing investor confidence in its long-term growth strategy.

As at Tuesday’s (Nov 19) close, the lender’s market capitalisation on the Ho Chi Minh Stock Exchange stood at 157.8 trillion dong (US$6.2 billion) – a far cry from its market value target of US$20 billion to claim the recognition of being among Asean’s top banks and price-to-book multiple of 2.5, which the stock had hit twice in the past five years.

Lottner believes the bank’s operating metrics remain solid from a mathematical standpoint, but acknowledges that achieving a 2.5 multiple in the market will require further efforts. He also expressed caution about unpredictable market reactions during crises.

As at end-September, Techcombank’s shareholders’ equity stood at about 144.37 trillion dong (US$5.7 billion), with the bank aiming to raise this figure to US$7.5 billion by the end of next year.

In recent years, Vietnam’s financial and real estate markets have been shaken by a sweeping anti-corruption campaign, including a crackdown on a US$12 billion banking scam and a US$1.2 billion bond fraud orchestrated by death-row tycoon Truong My Lan.

At Techcombank, a significant portion – 58 per cent – of its corporate loan and bond portfolio is exposed to the real estate sector, which appears to be rising after a long downturn but has yet to return to the pre-slump growth rates.

In an assessment on Nov 6, S&P Global Ratings noted that the lender has a slightly higher ratio of loans to deposits and relies heavier on wholesale sources of funds than its peer banks in Vietnam, putting it at greater risk of funding volatility and refinancing risks, particularly during a global liquidity crunch. 

However, the rating agency believes the bank could mitigate such risks with its ability to attract low-cost deposits through innovative savings products and an enhanced digital banking experience. The improvement in Vietnam’s economy and the recovery of the domestic real estate sector are also expected to ease the pressure on the bank’s asset quality.

“I think the most important thing is that you should set your own bar,” said Lottner, adding that Techcombank’s capital adequacy ratio is still maintained at 15 per cent, which is much higher than the State Bank of Vietnam’s minimum requirement of 8 per cent.

The bank has one of the highest ratios of current accounts and savings accounts (Casa) and profitability in the industry.

The lender has set several targets to meet in 2025, from a Casa ratio of 55 per cent and 20 per cent return on equity (ROE) to a net fee income to total operating income ratio (NFI/TOI) of over 30 per cent.

Based on the company’s Q3 financial report, its Casa, ROE and NFI/TOI ratios were recorded at 40.5 per cent, 16.8 per cent and 21.9 per cent, respectively.