Foreign investors rushing to join Vietnamese consumer finance market

Recently, there have been a series of acquisitions of Vietnamese consumer finance companies in which foreign investors ended up owning up to 49 per cent. Most recently, Shinsei Bank from Japan bought 49 per cent of MCredit, the consumer finance arm of Military Bank. Afterwards, MCredit was renamed MB Shinsei Consumer Finance Limited Liability Company.

Earlier, the State Bank of Vietnam allowed Ho Chi Minh City Development Bank (HDBank) to transfer 49 per cent of its capital in consumer finance company HDFinance to Japanese Credit Saison Co., Ltd.

After the completion of this sale, HDBank still retains 50 per cent of HDFinance. With 49 per cent now belonging to Credit Saison Co., Ltd, and the last 1 per cent to Ho Chi Minh City Securities Corporation (HSC). Subsequently, HDFinance was renamed HD Saison Finance.

Currently, HD Saison Finance has about 3,000 branches throughout 63 provinces and cities in Vietnam, collaborating with 2,000 partners and serving nearly 1 million customers.

According to Katsumi Mizuno, director of Credit Saison Japan International Markets, there still exists a great potential for credit growth in individual consumption and card services in Vietnam, owing to its young population and the meagre market penetration of these products.

Lending money is now one of the core activities of HD Saison, after the company enhanced its partnership with a number of schools to support students’ paying school fees and teachers’ consumer credit. Also, HD Saison provides customers with instalment loans ranging from hundreds of thousand to tens of millions of dong.

Many experts expect more acquisitions of this kind in 2017 as some deals are currently under negotiation. According to another source, a Japanese investor is offering to purchase 49 per cent of FE Credit from VP Bank.

Previously, VP Bank revealed seeking strategic partnerships, drawing up a plan to sell 49 per cent of FE Credit and looking for a domestic investor to buy at least 1 per cent to satisfy the current joint venture regulations.

FE Credit earned tremendous revenue in recent years. Specifically, its revenue in 2015 was VND1 trillion ($47 million) before tax and this figure in 2016 was VND2 trillion ($93 million).

As reported by Saigon-Hanoi Bank (SHB), the bank will soon found SHB Consumer Finance Company with the chartered capital of VND1 trillion ($47 million). The step was announced after the SBV issued Decision No. 2400 / QD-NHNN, which gives permission for the merger with Vinaconex-Viettel Financial Joint Stock Company (VVF). SHB also revealed plans to cooperate with foreign partners.

There has been a sharp increase in consumer credit (by 27 per cent), a tendency expected to last until 2020. Furthermore, the rich and the middle class in Vietnam are forecasted to double in the next 15-20 years, a serious appeal to foreign investors.

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