The consumer credit market grew by 50-65 percent per annum in recent years

The consumer credit market grew by 50-65 percent per annum in recent years, and is expected to reach VND1,000 trillion by 2019. The market is forecast to expand in following years with a flood of foreign and domestic lenders, and with the rapid development of technologies.

In October 2018, EVN Finance introduced Easy Credit, a consumer credit brand, in HCMC. The company is the newest market member, targeting clients with an average income of VND4.5 million a month.

Vietcombank, ACB and OCB have shown their intention to join the market.

Just in the last year, foreign big names entered the market Lotte took over Techcom Finance in an M&A deal worth VND1.7 trillion in October 2017. Prior to that, Shinsei Bank in September 2017 acquired 49 percent of shares of MB Shinsei, while Shinhan Card poured VND3.42 trillion into Prudential Vietnam Finance after becoming the owner of ANZ Vietnam.

In its report released last year, Ban Viet Securities estimated that Vietnam’s consumer credit market would grow rapidly from VND646 trillion in 2016 to VND1,000 trillion by 2019.

Meanwhile, according to the National Finance Supervision Council, consumer credit saw a sharp growth rate of 65 percent in 2017, which was even higher than the 50.2 percent growth rate in 2016 and higher than the average credit growth rate of 19 percent per annum.

Analysts say that it is now the golden time for financiers to provide consumer credit as all positive factors are converging. 

Vietnam has 95 million people who have increasing income and it is now easier to access loans thanks to technology and lenders’ marketing strategies.

Though the consumer credit market has grown rapidly recently, analysts believe that the market is still large.

Nguyen Tu Anh, deputy director of the Monetary Policy Department, cited a report as showing that the proportion of consumption to total GDP has been increasing.

In the last five years, consumer credit has increased by five times with outstanding loans rising from VND230 trillion in 2012 (8 percent of total outstanding loans) to VND1,100 trillion in 2017 (18 percent).

There are 18 operational finance companies, including six foreign invested ones, four one-member limited companies owned by state-owned corporations, and eight joint stock companies in which state-owned corporations hold more than 25 percent of shares.

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Nam Mai