Consumer credit market has only developed in recent years as 100 percent foreign-owned financial groups or joint ventures race to purchase shares of domestic finance companies.
Though it has just developed strongly over the last few years, the proportion of consumer loans out of the total outstanding loans have reached 18 percent, with the outstanding loans of more than one trillion dong in 2017, of which, loans for home purchase and repair accounted for the largest proportion with 52.9 percent, and even 76.5 percent; loans for purchase of home appliances and vehicles swelled 6.5 percent and 35.2 percent respectively.
Home Credit said it has provided more than 10 million consumer credit contracts after 10 years of presence in Vietnam. Sixty percent of customers borrowing to purchase telephones and home appliances (the major product branch of the company) enjoyed zero percent interest rate only. So far, Home Credit Vietnam has had more than 7.7 million customers in the database, about four million people among them have never borrowed from banks before.
Only after seven years entering the market, FE Credit held 55 percent consumer finance market share. So far, FE Credit has served seven million customers, cooperated with 7,000 partners in nearly 11,000 points of sale nationwide. This is also VPBank’s “golden chicken” when contributing half to the mother bank’s profits. In 2017, FE Credit’s profit accounted for more than 51 percent of VPBank’s total profit with more than 8.1 trillion dong.
HD Saison is expected by HDBank and the reality shows that in recent years, the operation of this company has also had spectacular growth. HD Saison contributed a significant proportion of profit to the mother bank. Out of the pre-tax profit attained last year by HDBank (more than 2.4 trillion dong), HD Saison contributed about 35 percent. In 2018, HD Saison’s profit is estimated at more than one trillion dong out of HDBank’s targeted profit of 4.7 trillion dong.
Consumer loans are forecasted to continue growing strongly with an average rate of 30-35 percent/annum. This is also the reason why this sector becomes attractive and finance companies are hunted by foreign investors.
For example, Techcombank transferred the entire capital contribution at TechcomFinance to Lotte Card (South Korea). MB’s Mcredit officially changed from one member to the joint venture of two members and above with MB to hold 50 percent, Shinsei to own 49 percent and Xuan Thanh Company to possess one percent stake. HDBank transferred 49 percent of HDBank’s chartered capital to Credit Saison (Japan) and renamed it into HD Saison now.
Recently, SeABank completed the acquisition of Post and Telecommunication Finance Company at 710 billion dong. Meanwhile, in spite of having 10 years operating in Vietnam consumer finance market, Prudential Finance still decides to sell to Shinhan Financial Group (South Korea) at nearly $151 million.
It is estimated that a series of M&A deals in the finance and consumer sector will continue happening. But when the growth is too hot, it is forecasted that consequences will happen, at least bad debt risks. Therefore, the State Bank has just had a written document asking credit organisations to govern consumer lending. Accordingly, credit organisations must fully promulgate regulations on consumer loan interest rates to be applied across the system in each period, including the highest lending rates, lowest lending rates for each product following the regulation of Circular No.43/2016/TT-NHNN.
