In the late 1990s, Vietnam’s consumer credit market began to take shape. However, at that time, people did not really pay attention to it, and commercial banks only considered it as a minor retail banking product.
With the participation of more consumer credit issuers in 2007, the market began to grow rapidly in the following years. So far, the proportion of consumer credit has accounted for about 20.5% of the total outstanding loans of the economy, which is 2.5 times higher than in 2012. According to BIDV, the growth rate of this market is about 20% per year.
Market share of Vietnam’s consumer credit market (source: FiinGroup)
Leading the market is FE Credit. After 10 years of operation, this credit institution gained a 52% market share in 2019, outstripping its two competitors, Home Credit (17%) and HD Saison (11%).
FE Credit informed that it has served 10 million customers and cooperated with more than 9,000 partners in more than 13,000 points of sale nationwide. Currently, this business has more than 4 million accounts using consumer credit services regularly.
Since 2016, FE Credit has been attracting capital from foreign investment funds with a total amount of up to 1.2 billion USD. Therefore, it is not difficult to understand that in the period 2015 - 2019, the total assets of FE Credit increased by 200%, from 23,000 billion VND in 2015 to more than 70,000 billion VND at the end of 2019.
Meanwhile, its counterpart - HD Saison, which is a joint venture between HDBank and Credit Saison Financial Group (Japan) and the oldest consumer credit company in Vietnam (2007), has a market share of 11%, ranked 3rd after FE Credit and Home Credit.
Being one of the 3 market leaders in Vietnam, HD Saison has a service introduction network at 14,000 locations, cooperates with 9,000 partners and serves over 5 million customers. HD Saison’s major products are installment loans for motorbikes, installment loans for electrical appliances and cash loans.
According to the financial report of HD Bank's, the total operating income of HD Saison in 2019 was 3,841 billion VND, an increase of 10.5% over 2018. Profits before and after tax of the company were 1,040 billion VND and 831 billion VND respectively.
As for Home Credit, after 10 years of presence in Vietnam, the company had built a network of more than 8,000 points of sale in 63 provinces and cities by the end of 2019. With more than 8,500 employees, Home Credit has a total of 8.54 million customers with 3 main products: installment loans for motorbikes, installment loans for household appliances, and cash installment loans.
According to economic experts, there is still so much room for the development of Vietnam’s consumer credit market in the coming time. Therefore, in recent years, foreign capital flows from leading financial groups in the region have continuously poured in to reshape this potential market.
Over the past four years, Shinhan Korea has attracted the most attention when it was not afraid to express its ambition to invade the consumer credit market in Vietnam. After acquiring ANZ's retail segment, Shinhan Vietnam continued to spend more than 150 million USD to expand personal customer loans by acquiring Prudential Vietnam Finance Limited Company.
At that time, Prudential's consumer finance segment had a 5.3% market share and ranked 4th in the market in terms of outstanding loans, following FE Credit, Home Credit and HD Saison. Right after the acquisition was completed, this Korean giant quickly set up Shinhan Vietnam Finance Company.
Shinhan informed that they are going to develop not only consumer loans, but also consumer installment loans, car loans and credit cards, through the combination of many different solutions.
"We also plan to offer new financial services and comprehensive financial solutions to Vietnamese customers based on coordinated resources among leading banks in Vietnam such as Shinhan Bank Vietnam, Shinhan Securities and Shinhan Life". Mr. Lim Young Jin, Chairman and General Director of Shinhan Card shared at the launching ceremony of the new company.
Also, in 2019, Lotte Finance - a subsidiary of Lotte Card – was officially launched in the Vietnamese market after 6 months of doing business. The event marked the presence of one of Korea's major “chaebols” in the consumer credit sector in Vietnam.
Lotte Card is a credit card issuer with the largest retail and service network in Korea. Lotte Card entered Vietnam in 2017 through the acquisition of TechcomFinance’s division of consumer finance at the price of 1,700 billion VND.
Vietnam's consumer credit market is so attractive that last year, Srisawad Group (Thailand) asked to buy Agribank's ALC I Finance Company, which was performing very poorly. Srisawad is not only ready to repay 100% of ALC I's charter capital to Agribank (200 billion VNC), but it is also willing to pay off the principal debt that ALC I borrowed from Agribank (323 billion VND) to fully own the company. An agreement between the two parties has been signed. After the State Bank of Vietnam issues its approval, Srisawad can participate in the financial market of Vietnam.
At the annual general meeting (AGM) held earlier this year, HSB's Board of Directors asked the shareholders’ approval to sell capital at SHB FC CTTC to a foreign strategic investor. Currently, the charter capital of SHB FC is 1,000 billion VND 100% owned by HSB. Before joining SHB, SHB FC was a finance company owned by Vinaconex - Viettel.
Similar to HSB, MSB also said that it was considering transferring a part of charter capital at FCCOM to Hyundai Card Co., Ltd. from Korea. The bank said that from the end of 2019, it has submitted a dossier to the State Bank for approval of the share transfer as prescribed and is waiting for appraisal.
At the end of June, the Board of Directors of VietinBank also approved the transfer of 49% capital of VietinBank Leasing to Mitsubishi UFJ Lease & Finance Company (Japan) and 1% capital to a domestic investor.
With more participation from foreign investors, it would not be a surprise if the consumer credit market of Vietnam was reshaped.