Personal credit is no longer a “big earner” for the banks only, as financial companies are rushing to cash in on this market, say industry insiders.

Statistics show that Vietnam is now home to 17 financial companies, which have been established by domestic and foreign-invested groups and corporations. These financial companies provide loans enabling consumers to buy cars and houses, similar to services provided by the banks.

To improve their competitiveness, financial firms have continuously released new products onto the market, based on the business advantages of their parent companies, expanded their limits on loans, adjusted deadlines for payments and linked up with the suppliers of consumer goods to serve their clients better.

For this reason, a large number of consumers prefer the products provided by financial companies, although their interest rates are 1.2-1.7 percent higher than those offered by the banks.

The Prudential Finance Company, an arm of the Prudential Insurance Group, is well known for its loans without collateral, based on valid insurance policies. The limit and duration of the loans are directly proportional to the value and period of the insurance policies. The company also provides its product online and by telephone to save time and transaction costs for clients.

Credit for house buyers provided by the PetroVietnam Finance Corporation (PVFC) is seen as safer than similar products provided by the banks. When clients sign a loan contract, they also sign an insurance policy with the life insurance company ACE Life, to keep ownership of the mortgaged assets. If there are defaults, ACE Life will pay the remainder of the loan to PVFC.

For the Hadico Financial Company, under the Hanoi Housing Development and Investment Corporation, a repayment period of up to 30 years is an advantage for its loans for house purchases.

Foreign-invested financial firms are also emerging as big rivals to the banks. Boasting global networks, these companies have teamed up with major producers to offer consumers non-profit loans to boost consumption.

Many major banks, including the Asian Commercial Bank (ACB), the Sai Gon Thuong Tin Commercial Bank (Sacombank) and the Dong A Bank (DongABank) plan to set up financial companies to tap into the personal credit market, but none of them have begun to operate yet.

A number of other banks have also unveiled their plans to put capital into multinational financial firms to improve their competitiveness in the personal credit market./.