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Oct 30, 2017 / 19:27

Consumer finance segment attracts foreign investors

Foreign investors are hunting to acquire Vietnamese finance companies as outstanding consumer loans are forecasted to reach the threshold of VND1 quadrillion (US$44.05 billion) by 2019.

There has recently been information about the intention of Prudential Vietnam to sell its finance company for US$150 million or Vietnam Technological and Commercial Joint Stock Bank (Techcombank) to sell Techcom Finance to a Korean investor for VND1.7 trillion.
The information about the sale of TechcomFinance has become hot after the bank announced on its website about the approval of its Board of Directors on the contract and transaction documents related to the full transfer of the entire capital of its subsidiary. TechcomFinance’ current charter capital is VND600 billion. The company was formerly known as Chemical Joint Stock Company (Vinachem) and was acquired by Techcombank in January 2015.
Customers shop at a Vincom trading center in Ha Noi.
Customers shop at a Vincom trading center in Ha Noi.
In September 2017, Military Commercial Joint Stock Bank (MBBank) sold 49 percent of its MBCredit to a Japanese partner Shinsei Bank Limited and renamed it MB Shinsei Company Limited.
Previously, HDBank also transferred 49 percent of the charter capital of HDFinance to Credit Saison (Japan). After this deal, HDFinance was renamed HD Saison, and HDBank owns 50 percent of its stake, while Credit Saison Company Limited owns 49 percent and Ho Chi Minh Securities Company (HSC) owns 1 percent of its stake.
According to experts, Vietnamese market has a lot of growth potential for consumer credit and card services, thanks to the young population and the modest number of customers using banking and finance products and services.
In fact, although the consumer finance market in Vietnam has only recorded strong growth in the recent three to five years, its development is very impressive.
Taking the lead in boosting consumer finance segment, the pre-tax profit of Vietnam Prosperity Commercial Joint Stock Bank (VPBank) in the first seven months of 2017 reached VND2.340 trillion, up by over VND1.2 trillion compared to the same period of last year. The main contributor to this achievement is the active operation of VPBank’s consumer finance services (FE Credit). Interests from the FE Credit’s loans were equal to the interests from the loans of its parent bank VPBank, but the efficiency was three times higher.
Specifically, for every VND100 of loans, FE Credit collected VND18 interests. After paying deposit interests, the net interest income of FE Credit in the first half of this year still reached over VND5.4 trillion, 30 percent higher than the net interest income obtained by the parent bank.
General director of VPBank Nguyen Duc Vinh said that the profits brought by FE Credit accounts for up to 50 percent of the bank’s annual business result and the company is considered as “the goose that lays golden eggs” for VPBank in the recent time and in the near and distance future. Thus, the sale or transfer a part of FE Credit’s stake is the issue that has always been considered carefully. Currently, the bank has no plan for this.
Besides FE Credit, many other finance companies also posted high profits. For example, HD Saison finance company directly under Ho Chi Minh City Development Joint Stock Bank (HDBank) attained a profit of VND440 billion and contributed about 30 percent of HDBank’s total profit, or Home Credit also reached a profit of VND1.226 trillion in 2016.