Techcombank: - Temenos

Temenos Case Study
IT efficiency:
Techcombank compared to European industry average for several metrics
11
1.5%
TCB
9.5%
INDUSTRY
IT Cost as
% of Income
Source: Techcombank, BCG
5.5%
TCB
13%
INDUSTRY
IT Cost as
% of Cost
8 bps
TCB
23 bps
INDUSTRY
IT Cost as
% of Assets
Improved management information
As part of its ongoing investment programme, Techcombank
has carried out several projects to enhance the quality and
timeliness of management reporting by making better use of
T24’s integrated data set and structure. These projects have
ranged from minor, incremental enhancements - like using the
T24 end-user tools to define new value-adding reports - to the
implementation in 2007 of the T24 management reporting
module.
With the introduction of this management reporting module,
Techcombank is able to get much more granular information – in
particular regarding profitability -to inform decision-making. For
example, Techcombank now tracks profitability by customer,
by product, by line of business (treasury, corporate, retail) and
by branch and, as already discussed, the bank is actively making
use of this information to determine its customer pricing. It also
uses the information, inter alia, to influence its risk strategy (see
later), its product promotions and investments, any variations in
regional pricing and its divisional investment decisions.
In order for this information to be valuable, it has to be
precise, so in generating these marginal profitability figures,
Techcombank uses more than 20 drivers for each. In the case
of profitability by product, for instance, Techcombank allocates
costs on the basis of number of transactions, channel mix of
transactions (and costs of the same) and processing time.
Techcombank is currently undertaking a project to be able to
generate profitability by Relationship Manager.
“AtTechcom, we have a conservative approach to risk, which, to a certain extent,T24 has
helped us to embed across the company. But, where T24 really adds value is by giving us a
global view of risk, both at the customer level and the total bank level.”
Ly Huong Thi Le, Manager, Credit Risk Department, Techcombank
Risk management
As already mentioned, Techcombank has grown revenues and profits faster than any other bank in Vietnam, but not at the expense of
risk management.
Comparing Techcombank to peers, it is clear that its loan book grew faster than the market average over recent years, at a compound
annual rate of 65% vs. we estimate 52.5% for the overall market. However, because of its success in growing deposits, its ratio of loans
to deposits, a key measure of risk, has actually been falling for the last 3 years.
2008 ratio of loans to deposits:
Techcombank vs selected domestic and international peers
1.4 1.4
1.3
1.1
BP
BCP
MHB
Natixis
1.1
1.0 1.0
0.9 0.9 0.9
Erste
Vietin
VBARD
HB
VIDB
VB
0.9
0.8
0.7
0.7 0.7
0.5
Post
SBIT
SCB
EXIM
TCB
ACB
Loan growth:
Techcombank vs selected domestic peers, 5 year CAGR to 2008
Vietin
VBARD
VB
MHB
SCB
Average
TCB
VIB
0% 50% 100% 150% 200 %
Source: company annual reports, Reuters, The Banker Database, broker notes Source: company accounts, Reuters, broker notes