A customer uses Home Credit’s app. Investment in digitalisation is currently the key for large financial companies to compete and expand their market shares. (Photo thoibaonganhang.vn) United Overseas Bank Limited (UOB) has recently completed theacquisition of Citigroup’s consumer banking business in Vietnam, which includesCitibank’s unsecured and secured lending portfolios, wealth management andretail deposit businesses.
Not only UOB, multinational financial groups from countries in theAsian region are also strongly promoting mergers and acquisitions (M&A) andcapital contributions in Vietnamese commercial banks to promote their consumerlending activities.
There has been recent information that Japan's Sumitomo Mitsui(SMBC) has reached a number of agreements to buy more than 1 billion shares ofVietnam Prosperity Commercial Joint Stock Bank (VPBank), equivalent to 5% ofthe bank’s shares, thoibaonganhang.vn reported.Currently, both parties have not yet made official announcement on thetransfer, but sources said the value of the deal could reach 1.4 billion USD andcould be completed by the end of this month.
In fact, SMBC and VPBank are not unfamiliar parties. From early2021, through SMBC Consumer Finance, MSBC spent 1.37 billion USD to acquire 49%stake of VPBank’s subsidiary FE Credit. This shows the purchase of more than 1billion VPB shares is most likely be part of the strategy to boost consumerfinance segment that SMBC has built up for months.
In addition to SMBC, other large financial groups, such as MUFGfrom Japan, Srisawad from Thailand and KB Kookmin Card from the Republic ofKorea, are also actively hunting to buy consumer finance units of Vietnamesebanks. For example, from August 2021, Saigon Hanoi Commercial Joint Stock Bank(SHB) signed agreements to transfer 100% of the capital at SHB Finance toMUFG’s Krungsri from Thailand. At the end of 2022, the State Bank of Vietnam(SBV) approved the list of SHB’s leaders including members from Krungsri. Thisshows the transfer of SHB’s capital at SHB Finance to Krungsri is going to thefinal stage to be completed in 2025.
According to experts, with the active participation ofmultinational corporations, the Vietnam’s consumer finance market will see astrong breakthrough with diversified products and services and strongdevelopment in microfinance digitalisation.
In fact, besides large corporations from Japan, the Republic ofKorea and Thailand, large Vietnamese groups and corporations, such as Masan,FPT, Viettel and Bamboo, have also made strong investments in the consumerfinance segment. For example, in February, Masan invested 105 million USD in TrustIQ to develop artificial intelligence applications in retail and consumerfinance to its customers. Masan has also cooperated with Techcombank to createthe WINLife ecosystem to exploit the personal financial needs of customers whoare using Masan’s retail and consumer services.
Investment in digitalisation is currently the key for largefinancial companies to compete and expand their market shares as a large numberof customers with consumer finance needs have turned to cashless applicationsand modern borrowing technologies.
Currently, financial companies investing heavily in digitalisationsuch as VietCredit and MCredit are having very positive growth rates. Inparticular, MCredit, with the backing of MB and Shinsei Bank, has appliedartificial intelligence and cloud computing applications to serve more than 2million customers, which has helped MCredit rank third among the group offinance companies with the largest market share in Vietnam.
Meanwhile, despite having a smaller size, VietCredit has also hada remarkable growth rate when it recorded a loan balance of more than 4.4trillion VND by the end of 2022 and a pre-tax profit growth of 52% over thesame period of 2021.
To compete for customers and maintain market share, largefinancial groups such as FE Credit, Home Credit and HD Saison also have had tomake strong investments in developing new digital application platforms. FECredit has invested in Ubank application to replace FE Credit Mobile to becomea major neobank in the region in the next few years. Meanwhile, HDSaison hasalso invested in a new application on the mobile platform to exploit the groupof small traders in traditional markets. HDSaison last year was very successfulin adding 1.2 million new customers to develop consumer loans.
According to experts, after welcoming strong investments andcooperation from major financial group in the region, the Vietnam’s consumerfinance market is experiencing increasingly fierce competition and M&Adeals from multinational corporations targeting the country’s consumer financesegment are forecast to be the leverage to strongly stimulate the wave ofdigitalisation and microfinance coverage in the country in the coming years./.
VNA
