Lotte Finance Vietnam – backed by Lotte Card, a credit card unit of South Korean conglomerate Lotte Group, started operation today, according to the company’s statement.
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In early 2018, Lotte Card bought out TechcomFinance, a subsidiary of Vietnam Technological and Commercial Joint Stock Bank (Techcombank), in a bid to tap in Vietnam’s fast growing consumer finance market.
The deal was reportedly worth VND1.73 trillion (US$74.25 million), 2.89 times higher than the charter capital of TechcomFinance at VND600 billion (US$25.75 million).
Lotte Card later received a license from the State Bank of Vietnam (SBV) to establish and operate its Lotte Vietnam Finance, which has charter capital of VND600 billion (US$25.75 million), as a finance company in Vietnam.
Following this move, Lotte Card has become the first Korean credit card company to make inroads into Vietnam’s consumer finance market by earning licenses to operate credit card and other related businesses.
TechcomFinance currently holds credit card, installment finance, and consumer lending licenses in the country.
Lotte Card plans to expand its business in Vietnam by developing various finance business models based on network established by other units that have already joined the local market, according to Pulse.
The company plans to develop customized financial products based on its knowhow and introduce installment finance products, while engaging in credit card and consumer lending businesses focusing on its retail subsidiaries such as department stores and large discount stores.
Vietnam now has about 10,000 places that accept card payments, concentrated in big cities like Hanoi and Ho Chi Minh City and other major tourism sites.
According to reports from the SBV, the country had 141.59 million financial cards by the end of June 2018, up 7.3% against early this year. Of the total, more than 90% were debit cards, meaning other kinds of cards, including credit cards, accounted for a very small proportion.
Meanwhile, investing in credit cards brings in large profits for issuers because interest rates of the loans are higher than that of other loans. Besides, they can earn money from fees such as annual fees, cash withdrawal fees and late payment penalty fees.
