VietNamNet Bridge – Experts believe that consumer finance would witness a boom in 2013, when there are all favorable conditions for the market to develop.
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Consumer finance services have been available in Vietnam over the last 10 years.
The market got warmer in 2007 when a series of foreign consumer finance firms
turned up in Vietnam. However, the retail finance service sector still has not
fully developed, which means great opportunities are still available for
investors.
Stox Plus, a prestigious finance analysis firm in Vietnam, has released a report
which says that the Vietnamese market has great potential and that it would see
a boom in consumer finance in 2013.
Commenting about the operation of Vietnamese commercial banks, Stox Plus
believes that they would not focus on lending to businesses as they have been
doing so far, but they would also consider providing retail banking services.
This means that individual consumer finance would be the choice of many banks.
Of course, the Vietnamese promising market would be the destination of foreign
finance institutions which would make a presence in Vietnam through the merger
and acquisition deals or cooperation with existing firms.
In fact, the individual consumer finance market took shape in 1990s, when the
banking products were provided by commercial banks as a part of retail banking
services.
However, the market has not developed until recent months, when commercial banks
found it very difficult to push lending to businesses, which have met big
difficulties in the economic downturn and don’t intend to expand business. This
has forced banks to think of pushing up consumer credit to offset the decreases
in the outstanding loans provided to businesses.
The banks have recently realized that the lending to individuals has shown
better growth, while the non-performing loan ratio is much lower than the
lending to businesses.
The report of Stox Plus said that a lot of rural banks have developed into urban
banks with the bigger scale of operation, but they still have the branches in
rural areas which allow them to reach out to different localities across the
country. Kien Long Bank, for example, has developed individual consumer finance
at a small scale.
Bigger banks have jumped on the bandwagon. Techcombank, VP Bank, ACB and
Sacombank are some of them.
However, analysts believe that great potentials are still awaiting other banks
as well. Vietnam has the population of 90 million people with a high percentage
of young population, the subject to individual consumer finance services.
Meanwhile, the average income of 51 percent of the population, who are at the
“golden age,” has been improving considerably. This would help make the
“borrow-to-buy” concept more popular among Vietnamese people.
Besides the foreign invested financial institutions, Vietnam has 12 state owned
finance companies established in late 1990s. However, the companies, which are
the subsidiaries of commercial banks, have been mainly serving the operation of
the parent groups, while only several institutions have been providing loans to
individuals.
The economic growth rate and government’s policies are a part of the story about
the consumer finance development, which explains why consumer credit has not
been interested yet.
Currently, the consumer finance services have also been provided by a lot of
companies which join the market unofficially.
DDDN