In the Vietnam Consumer Finance Report released by StoxPlus, the consumer finance market in Vietnam has witnessed big transformation in recent years. Specifically, total credit balance of the Vietnam’s consumer finance in 2012 was 7.3 billion USD, but has increased to nearly 26.55 billion USD in 2016.
Due to high economic growth rate, consumers are confident in future income, so they are willing to take loan for current spending.
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With this being said, Vietnam has population of more than 92 million, in which 70% are in the range from 15 – 64 years of age, as well as the economic growth above 6%, which are reasons for the attraction of Vietnam’s market. In the past 10 years, famous global retailers such as Circle K, Shop & Go, Family Mart coming to Vietnam and the rapid growth of domestic retailers such as Vinmart, Coopmart, The Gioi Di Dong, have been favorable conditions for the booming of consumer credit in Vietnam.
Since 2011, the consumer finance market in Vietnam has grown rapidly, for which the period 2011 – 2014 has growth rate of nearly 30% per year, and in 2015 reached 59%. Total credit balance for consumer finance for customers in 2015 was 583 trillion VND, equivalent to 20.5% of the final consumption value of individuals and households. If excluding loan for house purchasing or repairing, total credit balance in 2015 reached 272 trillion VND (equivalent to 6.62% GDP), which exceeded China (6%) and Japan, but still lower than developed countries such as US (17%), Europe (14%) and Korea (over 20%).
The booming of consumer finance in Vietnam is due to both demand and supply. From the demand side, the growth rate of spending in Vietnam for many years have directly impacted demand for consumer finance. Besides, due to high economic growth rate, consumers are confident in future income, so they are willing to take loan for current spending. Moreover, Vietnam is currently in the golden population, so there are a high percentage of population willing to take loan for consumption.
In the supply side, the rapid advancement of information & technology (IT) has allowed commercial banks and Fintech companies to quickly collect and analyze requests for loans in a reliable way, so that financial institutions can provide consumer finance with competitive interest rate and a low rate of risks.
However, the booming of consumer finance also poses many challenges for administrative agencies. The crisis of credit card in Korea in 2003 is a clear example for the rapid growth of consumer finance.
