Consumer lending is booming

FE Credit, a subsidiary of VP Bank, has received approval from the State Bank of Vietnam’s to raise its charter capital to VND7.3 trillion, or triple the current capital level.

FE Credit is now holding the biggest share of the consumer credit market, serving 10 million customers and cooperating with 8,500 partners at 12,200 sale points nationwide.

EVN Finance, a subsidiary of the Electricity of Vietnam (EVN), officially joined the consumer lending market with Easy Credit brand this October. 

The first lending package that Easy Credit launched targets customers who have not accessed bank services and have monthly income from VND4.5 million.

According to Bui Xuan Dung, CEO of EVN Finance, Easy Credit will use technologies to provide hi-tech finance products to customers. To compete with rivals, the company will boost sales through different channels, including online sales. 

Dung hopes Easy Credit will be present in 63 cities/provinces by the end of 2010 and have more than 1 million customers.

VietCredit, a company established by Vicem (the cement manufacturer), Viet Capital Bank and Vietcombank, has started after getting the operation license from the State Bank.  
A senior executive of the company said VietCredit joined the market when there were already many players, so it would focus on cash lending.

Prior to that, SHB Finance, belonging to the Sai Gon-Hanoi Commercial Bank, also joined the market with charter capital of VND1 trillion. It will concentrate on cash lending and target clients with monthly income of at least VND3 million.

According to SHB Finance, the demand from people with modest income, including factory workers and petty merchants, amounts to 50 percent of consumer loan demand.

Analysts noted that there is a ‘consumer lending rush’ with enterprises from many different business fields becoming consumer lenders. 

A lot of new brands have appeared to compete with existing players such as Home Credit, FE Credit and HD Saison, which shows the great potential of the Vietnamese market.

According to the Credit Information Center (CIC), the credit consumer growth rate in Vietnam is 30-35 percent per annum. 

The number of people making credit transactions reported by the banking system and finance companies accounts for 30 percent of the total population, which means the market potential is very promising.

Experts also say that consumer lending is a lucrative business in Vietnam where there are approximately 100 million people, and 70 percent are of working age. 

What makes Vietnam extremely attractive is the low accessibility to bank consumer loans, and those who don’t borrow money from banks could be potential clients of finance companies.

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