Statistics of the State Bank of Vietnam (SBV) showed that there were 16 finance companies operating in the system by the end of 2018, including six units which are members of major domestic banks such as Maritime Bank Finance Company Limited (FCCOM) of Maritime Bank Commercial Joint Stock Bank (MaritimeBank), VPBank Finance Company Limited (FE Credit) of Vietnam Prosperity Commercial Joint Stock Bank (VPBank), HD Saison Finance Company Limited (HD Saison) of HCM City Development Commercial Joint Stock Bank (HDBank), SHB Finance Company Limited (SHB Finance) of Saigon Hanoi Commercial Joint Stock Bank (SHB), MB Finance Company Limited (MCredit) of Military Commercial Joint Stock Bank (MBBank), Post and Telecommunications Finance Company Limited (PTF) of Southeast Asia Commercial Joint Stock Bank (SeABank). Previously, Vietnam Technological and Commercial Joint Stock Bank (Techcombank) owned a finance company but it was sold to a foreign group Lotte Card.
The wave of establishing finance company of banks over the years has greatly contributed to boosting the market for consumer lending to grow and be more efficient. With the advantages obtained from the parent banks including governance and financial resources, banks’ finance companies have a clear advantage in the market. The evidence is that two out of the above six finance companies, including FE Credit and HDSaison are having dominating market shares. The four remaining finance companies also have ambition to break through in the near future, and some have achieved positive results. Thus, the consumer credit market is forecasted to see fiercer competition in market share.
FE Credit VPBank
FE Credit was formerly a consumer credit division of VPBank. Later, VPBank acquired Vietnam Coal and Mineral Finance Company, changed its name to FE Credit, and gradually moved the operation of its consumer credit division to FE Credit.
According to VPBank, by the end of 2018, the number of customers using FE Credit services reached 10 million customers and market share of the company was over 55%. In 2018, more than 16 trillion dong of operating income was created by FE Credit, contributing 52 percent to the total operating income of the entire bank. FE Credit’s pre-tax profit in 2018 was estimated at above 4.1 trillion dong.
FE Credit has more than 8,500 partners in more than 12,200 points of sales nationwide, and this number is larger than any consumer finance company in Vietnam. This distribution network brings a record number of nearly 200,000 loans each month.
The obvious fact is that FE Credit’s growth rate significantly slowed down in 2018. Its contribution to the consolidated bank has also dropped from above 50 percent to 44%.
VPBank’s general director Nguyen Duc Vinh said that there are still many opportunities for consumer credit growth in Vietnam. However, since FE Credit’s current scale is very large, the growth rate can hardly be as high as in the first phase, but Vinh believed that the growth of absolute numbers will still be good.
While the market questions whether FE Credit will continue to be “a goose that lays golden eggs” for VPBank, Vinh affirmed that VPBank’s orientation is to continue developing consumer loans, and consider FE Credit and VPBank’s individual customer division as the main driver in the future.
HD Saison HDBank
HD Saison was formerly known as SGVF, owned by French Bank Societe generale. After being acquired by HDBank, SGVF was renamed HDFinance. In March 2015, CREDIT SAISON (Japan) invested in HDFinance, holds 49 percent of the company’s charter capital, and changed its name to HD Saison.
As of December 31st 2018, HD Saison’s charter capital was 1.4 trillion dong with a total outstanding credit of 10.653 trillion dong. This finance company has more than 13,825 points of sales located in 63 provinces and cities nationwide. In late 2018, HD Saison’s total assets reached 12.414 trillion dong. The company’s pre-tax profit in 2018 was 901 billion dong, up by 73 percent compared to 2017.
According to HDBank’s leader, HD Saison owns more than five million customers. The company’s targeted customers are those which have not been paid attention by other banks and those which have low to medium income with monthly income from two to seven million dong. These two customer segments account for a major proportion of HD Saison’s current customers.
As of December 31st 2019, HDSaison’s lending portfolio included 42 percent of credit of motorbike loans, 24 percent of household appliances loans, 32 percent of cash loans and two percent for lending to other new products such as trucks and education.
In the first quarter of 2019, the consolidated HDBank recorded a pre-tax profit of 1.102 trillion dong, including a profit of 900 billion dong of the parent bank. Thus, the profit of HD Saison was about 200 billion dong.
MCredit MBBank
MCredit was established on March 10th 2016 with a charter capital of 500 billion dong, wholly owned by MBBank. In October 2017, MCredit completed the procedure to become a joint venture of Shinsei Bank (Japan), and was renamed MB Shinsei Finance Company Limited. In March 2018, MCredit increased charter capital to 800 billion dong, in which MB still holds a 50 percent of stake.
At the conference summarising year 2018 and implementing business plan in 2019, MCredit’s representative said that MCredit recorded profit right in its first year in operation. The company’s pre-tax profit in 2018 reached 320 billion dong with a disbursed revenue of 5.888 trillion dong. By the end of December 31st 2018, the outstanding loans of MCredit were 5.480 trillion dong with a bad debt ratio of 5.93%. Notably, the credit growth of MCredit was up to 254%, and the number of customer access records reached 743,000.
Shuji Shinohara, MCredit’s Standing deputy general director said that the company grew by more than 200 percent in 2018 and will maintain this growth in both size and profit in 2019.
SHB Finance SHB
SHB Finance was established on December 12th 2016 with a charter capital of one trillion dong, based on the merger of Vinaconex Viettel Finance Joint Stock Company (VVF) into SHB.
SHB said that in 2018, the company has accelerated the coverage and business deployment speed with over 90,000 customers, outstanding loans of over 709 billion dong and pre-tax profit of 11.1 billion dong. SHB Finance’s personnel as of December 31st 2018 included 1,149 people, up by 1,125 people compared to 2017. SHB Finance aims to be in the top three finance companies operating efficiently and safely in Vietnam by 2020.
There is not much information about the business performance in 2018 of the two remaining finance companies FCCOM of Maritime Bank and PTF of SeABank. In particular, PTF has only been transferred by the Vietnam Post and Telecommunications Group (VNPT) to SeABank in late 2018 and it takes some time for the company to officially participate in the race. SeABank spent 710 billion dong on this deal. The bank’s leader said that this was a strategic step in diversifying retail products and services, whereby PTF will be the key spearhead of the bank in the consumer finance battle.
While the six above-mentioned banks continue to put their expectations on the growth of finance companies in the near future, the wave of banks establishing or acquiring finance companies may not stop in the near future because the consumer credit pie is still very attractive. Typically, at the 2019 Annual general Meeting, Tien Phong Commercial Joint Stock Bank (TPBank) has approved the policy of seeking and buying 100 percent stake of a finance company to make it a subsidiary which operate in consumer credit field. The goal is expected to be completed in 2019.
The competition for market share in this market will be even fiercer as not only more banks but some big foreign banks have jumped in the field. For example, Lotte Card acquired Techcombank’s finance company, and Shinhan Bank bought Prudential Finance Company.
