The Military Bank’s (MB) buying of Song Da Finance JSC (CDFC) has resulted in the establishment of the MB Consumer Finance Company Ltd, an MB subsidiary with chartered capital of VND500 billion.

After the deal was approved by the MB extraordinary shareholders’ meeting held on October 6, 2015, MB has become the latest commercial bank in the consumer finance sector.

MB jumped into the market segment after realizing that the market has been growing very rapidly in the last 10 years while analysts predicted it would even see higher growth rate - 20-30 percent until 2019.

Nguyen Minh Phong, a renowned economist, said he can see the great development potential of the consumer finance market which is reflected in the establishment of a lot of consumer credit divisions under banks and the establishment of a series of finance companies in recent months.

A lawyer noted that the consumer finance boom could be attributed to
Document No 5342 dated in July 2014 which requests credit institutions to increase lending without required mortgaged assets.

Before the MB-SDFC deal wrapped up, the market witnessed a series of other successful transactions. 

More recently, in July 2015, HD Bank and Credit SaiSon launched HD SAISON Finance into the market.

In 2013, HD Bank took over Viet Société Générale and renamed it as HD Finance. Later, in April 2015, with capital contribution from Credit Saison, the strategic investor, changed into HD SAISON Finance.

In June 2015, State Bank’s Governor released a decision approving the deal of Maritime Bank taking over Vinatex Finance and setting up MSB Finance Company.

Just some days before that, the State Bank also agreed on Techcombank’s deal of buying the Vinachem Finance Company (VCFC).

A series of similar deals were approved by the State Bank in 2014, under which VP Bank took over Vinacomin Finance Company (CMF) to form up VBP FC with FE Credit brand.

An analyst said he believes the competition in the consumer credit market to finance private purchases will be stiffer in the time to come as more and more finance companies have joined the market.

SHB is reportedly going to convene an extraordinary shareholders’ meeting to discuss the plan to admit Vinaconex Finance Company (VVF), slated for October 24.

However, he commented that the market is large enough for service providers as the demand for consumer loans has been increasing rapidly. “As Vietnamese income has improved, they tend to spend more money on cars, motorbikes and houses. And that is why consumer finance is expanding,” he said.

Infonet