Banks eye consumer finance for bigger share hinh anh 1A 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

HCM City (VNS/VNA) - Several banks are keen to establish consumer finance arms to grab a bigger share of a market that is expected to reach 1,000 trillion VND (4.38 billion USD) by 2020 and grow at 29 percent annually.

At its annual general meeting last month Orient Commercial Bank tabled a plan to set up a finance company this year.

Trinh Van Tuan, its chairman, was quoted by Dau tu Chung khoan (Securities Investment) newspaper as saying the bank’s consumer credit business is expanding rapidly and so it needs an independent company to streamline the business and improve risk management.

The lender plans to either establish a wholly-owned subsidiary with a charter capital of 500 billion VND (22 million USD) or acquire at least 70 percent in an existing finance company.

Asia Commercial Bank (ACB) too plans to set up a financial company with a charter capital of 500 billion VND.

News reports had suggested that ACB wanted to acquire the Post and Telecommunication Finance Company (PTFinance), but last February SeABank bought it for 710 billion VND.

After closing deals to buy finance companies, several banks have quickly looked for foreign strategic partners.

For instance, Techcombank sold Techcombank Finance Company, which it had acquired in 2015, to the Republic of Korea’s Lotte Card for 1.7 trillion VND.

Prudential has reached agreement to sell Prudential Vietnam Finance Company to Shinhan Card, a subsidiary of the RoK’s Shinhan Financial Group, for nearly 151 million USD.

HDBank sold 49 percent of its stake in HDFinance to Japan’s Credit Saison.

An executive at the Saigon-Hanoi Commercial Joint Stock Bank (SHB) told Securities Investment newspaper that after the bank was merged with Vinaconex-Viettel Finance JSC and established SHB Finance, whose main business is consumer credit, many companies from the EU, the US and Japan have shown interest in buying stakes in it.

The executive said SHB is considering some of the offers, explaining that having a foreign strategic partner would bring international management and sales experience.

Among consumer finance companies owned by lenders and not yet sold to foreign firms is VPBank’s FE Credit.

Last year FE Credit accounted for 51 percent of the bank’s profit, the main reason why VPBank is in no rush to sell it to foreign companies.

Maritime Bank has also remained silent about looking for a foreign partner since acquiring Vietnam Textile and Garment Finance Joint Stock Company in 2015.

The consumer finance market is expected to boom since consumers are now used to it and realised its convenience, experts said.

According to estimates by the National Financial Supervisory Commission, consumer lending surged 65 percent last year, up from 50.2 percent in 2016.

The ratio of consumer credit to total outstanding loans in the banking system was estimated at 18 percent last year, up from 12.3 percent in 2016.-VNA