In the past few months, FE CREDIT continued to maintain its growth momentum along with strong profitability, opening up brighter development prospects in the future.
FE CREDIT’s loan portfolio, excluding loans to corporate customers, grew by 9.4 percent QoQ (quarter on quarter) (Q1/2019) and by 26 percent YoY (year-on-year) (Q2/2018). Although the growth rate of the loan portfolio was not high, the operating efficiency had improved significantly when revenue had grown double-digit, reaching 13 percent compared to the previous quarter and 41 percent over the same period of 2018.
The change of loan portfolio structure to focus on credit quality helped reduce the non-performing loan (NPL) ratio of FE CREDIT to 5.4%. Thanks to FE CREDIT’s strategy to focus on existing customers, which continued to produce expected results.
The sustainable growth platform of FE CREDIT
In Q2, FE CREDIT had three main drivers for the growth of the loan portfolio.
1. Cross-selling and extra-selling contributed the most to FE CREDIT’s growth, reaching more than 10 percent QoQ and 44 percent YoY. Investments in big data analytics systems enabled FE CREDIT to research and to identify potential customers more effectively. The growth of this segment contributed 54 percent to the growth of total loans in the period.
2. Loan disbursement for new customers increased by nine percent compared to the previous quarter and 24 percent over the same period in 2018, becoming the second largest contributor to the overall growth. $NAP-online loan application had become one of the most popular financial applications in Vietnam with over 1.4 million downloads and contributed to the growth in this segment. That increased the level of awareness and accessibility of FE CREDIT’s loan products to customers who had not yet accessed financial services.
3. Increasing quality of life helped customers’ demand for installment loans for consumer electronics and motorbike products continue to grow sustainably. Point-of-purchase lending accounted for nine percent of FE CREDIT’s total debit balance, an increase of nearly 10 percent compared to the first quarter of 2019. FE CREDIT had well grasped market demand through promoting cooperation with other leading electronics and motorbike retailer to boost home shopping loans.
Credit card growth had reached 26 percent over the previous quarter and increased 102 percent over the same period of 2018 with the total number of cards issued reaching over 1.7 million. This incredible increase signaled a great growth opportunity in the future for FE CREDIT in terms of card products.
Profitability is improved through a revolving loan model
The credit card of FE CREDIT was one of the businesses with the highest growth rate in Vietnam in terms of both scale and transaction volume, accounting for 40 percent of total net receivables.
This product helped FE CREDIT to strengthen relationships with customers who use credit cards for daily spending transactions. The effectiveness of the activity mentioned above was reflected by the fact that FE CREDIT’s card spending doubled in the Q2/2019 compared to the same period in 2018.
Profitability is improved through cost management and loan quality
NPL ratio in this quarter fell to 5.4%, much lower than the internal standard of six percent. That came from a strategy of focusing on cross-selling for existing customers and credit card segments to make better use of existing customer behavioral data analysis to offer appropriate interest rates in accordance with the level of risk.
FE CREDIT’s cost income ratio (CIR) fell to 30 percent in the Q2/2019. The improvement in this index represented FE CREDIT’s strategic efforts in digitising its operating processes, focusing on reducing operating costs such as postage, delivery, etc. Thanks to that, profit before tax increased by 79 percent compared to the previous quarter and by 113 percent over the same period in 2018.
Expanding the financial ecosystem will be the development focus of FE CREDIT
Over the past two years, FE CREDIT focused on digitising and achieving positive business results. In the coming period, the company aimed to be present everywhere consumers were present to provide incentives and products meeting all needs of users through available credit limits. FE CREDIT signed strategic cooperation agreements with many financial technology organisations (Fintech) worldwide, thereby helping consumers to access credit with simple manipulation on their mobile phones.
Success in increasing the level of customer interaction and understanding would be the next step in the development plan of FE CREDIT in the current technological era.
