A customer at a branch of FE Credit, the consumer finance arm of VPBank. Several banks are now keen on establishing their own consumer finance companies as the industry seems set for a long boom phase.(Photo tieudungplus.vn)HCM City (VNS/VNA) - Several banks are keen to establish consumer financearms to grab a bigger share of a market that is expected to reach 1,000trillion VND (4.38 billion USD) by 2020 and grow at 29 percent annually.
At its annual general meeting last monthOrient Commercial Bank tabled a plan to set up a finance company this year.
Trinh Van Tuan, its chairman, was quoted byDau tu Chung khoan (Securities Investment) newspaper as saying the bank’sconsumer credit business is expanding rapidly and so it needs an independentcompany to streamline the business and improve risk management.
The lender plans to either establish awholly-owned subsidiary with a charter capital of 500 billion VND (22 millionUSD) or acquire at least 70 percent in an existing finance company.
Asia Commercial Bank (ACB) too plans to setup a financial company with a charter capital of 500 billion VND.
News reports had suggested that ACB wantedto acquire the Post and Telecommunication Finance Company (PTFinance), but lastFebruary SeABank bought it for 710 billion VND.
After closing deals to buy financecompanies, several banks have quickly looked for foreign strategic partners.
For instance, Techcombank sold TechcombankFinance Company, which it had acquired in 2015, to the Republic of Korea’sLotte Card for 1.7 trillion VND.
Prudential has reached agreement to sellPrudential Vietnam Finance Company to Shinhan Card, a subsidiary of the RoK’sShinhan Financial Group, for nearly 151 million USD.
HDBank sold 49 percent of its stake inHDFinance to Japan’s Credit Saison.
An executive at the Saigon-Hanoi CommercialJoint Stock Bank (SHB) told Securities Investment newspaper that after the bankwas merged with Vinaconex-Viettel Finance JSC and established SHB Finance,whose main business is consumer credit, many companies from the EU, the US andJapan have shown interest in buying stakes in it.
The executive said SHB is considering someof the offers, explaining that having a foreign strategic partner would bringinternational management and sales experience.
Among consumer finance companies owned bylenders and not yet sold to foreign firms is VPBank’s FE Credit.
Last year FE Credit accounted for 51 percentof the bank’s profit, the main reason why VPBank is in no rush to sell it toforeign companies.
Maritime Bank has also remained silentabout looking for a foreign partner since acquiring Vietnam Textile and GarmentFinance Joint Stock Company in 2015.
The consumer finance market is expected toboom since consumers are now used to it and realised its convenience, expertssaid.
According to estimates by the NationalFinancial Supervisory Commission, consumer lending surged 65 percent last year,up from 50.2 percent in 2016.
The ratio of consumer credit to totaloutstanding loans in the banking system was estimated at 18 percent last year,up from 12.3 percent in 2016.-VNA
VNA
