Consumer finance companies are recovering
- 0
- Enterprise
- 10:52 09/10/2024
DNHN - After a tough year, the consumer finance market is showing strong recovery in the first half of this year, reflecting improved business performance by companies in the sector.
2023 was regarded as one of the most difficult years of the decade for consumer finance companies. The primary customer base, consisting mainly of low- and middle-income earners, was heavily impacted by the effects of the pandemic and unfavorable economic conditions. Outstanding loans of consumer finance companies shrank by more than 9%, accompanied by weak credit demand. Companies also became more cautious in lending, especially amid rising bad debt ratios and widespread defaulting.
Moving into the first half of this year, the consumer finance market has begun to show positive signs. Large finance companies like Home Credit Vietnam reported after-tax profits more than double that of the same period last year, reaching VND 474 billion. EVN Finance also showed signs of recovery, with after-tax profits increasing by 50%, reaching nearly VND 250 billion.
Other companies, though still in the red, have seen significant improvement in their business results. FE Credit, a major player in the consumer lending sector, reduced its losses from nearly VND 3,000 billion to just over VND 700 billion. This shows that the company's restructuring and debt management efforts are paying off.
Similarly, Shinhan Finance Vietnam reported a sharp drop in losses, from VND 246 billion to VND 95 billion in the first six months. Meanwhile, Mirae Asset Finance posted a loss of nearly VND 350 billion, slightly less than the same period last year. Notably, Mcredit was a rare case that saw a decline in profits, from VND 328 billion to VND 43 billion.
According to FiinGroup's assessment, the Vietnamese consumer finance market hit bottom in 2023 and is now gearing up for a new growth cycle. Experts believe that the recovery will become more pronounced in the second half of the year, thanks to positive signals from the macroeconomic environment, including the recovery of manufacturing and export sectors.
In particular, since the beginning of July, the State Bank has issued new regulations aimed at simplifying procedures for small loans under VND 100 million. This is expected to create more favorable conditions for the consumer lending sector, helping to increase access to capital for consumers.
In the long run, FiinGroup believes that the consumer finance market holds significant growth potential. Although the penetration rate remains low compared to other countries in the region, the changing perception of the new generation of consumers, especially Gen Z, will be a driving force for development. This generation views consumer finance products not just as debt but as flexible and modern payment options.
Experts suggest that the consumer finance market will become increasingly fragmented and competitive. Small and medium-sized companies with lean business models have the opportunity to rise, while major players tend to slow down, with some undergoing restructuring and adjusting their business strategies. From a concentrated market, a diverse and highly competitive market will emerge.
However, it is undeniable that finance companies still face many challenges in raising capital and expanding their operations. This is particularly true for entities owned by domestic banks, as they plan to divest from the consumer finance sector to focus on core services.
In this context, the consumer finance market will continue to witness deeper participation from foreign investors. The trend of local banks divesting from their consumer finance subsidiaries will open up opportunities for foreign investors to enter the market, driving growth and innovation in the sector.
Thus, Vietnam's consumer finance market is on a recovery path, with many positive signs from finance companies. Although challenges remain, the long-term growth potential and changing consumer perceptions will serve as a driving force for the sustainable development of this sector in the future. Companies must continue to adjust their business strategies, optimize operations, and effectively capitalize on the opportunities arising from the gradually recovering economic environment.
Phan Chinh
Related news
#financial instruments
How are bank bond interest rates attractive to investors?
Bank bonds are attracting investor interest due to their attractive interest rates and high level of security. This is a popular choice among investors in stable and safe financial products today.
ESG – inevitable development trend for enterprises
ESG (Environmental, Social and Governance) has become an important tool for evaluating a company's social responsibility. ESG is seen as a commitment to the capacity and culture of the enterprise for capital raising and borrowing.
Investor awareness of asset management is still limited
Mr. Trinh Ha - market strategy expert, believes that currently, investor awareness of asset management or asset accumulation is still limited. Therefore, it is necessary to organize more programs and training courses for investors.
Testing the "sandbox" model to diversify the Vietnamese stock market
The "sandbox" model to test new securities products will help select a number of securities companies and intermediary financial institutions with sufficient potential to pilot some structured products for the market.
Prime minister directs to ensure security and safety of financial and monetary market operations
The Prime Minister has recently urged relevant ministries, branches, and agencies to take the lead in quickly implementing steps to protect the security and safety of financial market activities by their assigned powers and responsibilities; money, and financial instruments.
Why is bank security very important?
In the digital age, the banking sector plays a crucial role in managing the finances and transactions of individuals and organizations. With the development of technology, the issue of bank security has become one of the top priorities.
Đọc thêm Enterprise
The "fierce" race for market share among securities companies
The Ho Chi Minh City Stock Exchange (HoSE) has just announced the third quarter trading market share, revealing the fierce competition in the securities industry.
Two land rent reduction plans proposed to support businesses
The Ministry of Finance has recently submitted a draft decree to the Government proposing a reduction in land rent for 2024, aiming to stimulate production and business activities. The two proposed plans suggest a reduction of either 15% or 30%.
Small and medium enterprises have many advantages for green transition to access EU market
In an interview with the Business and Integration Magazine, Mr. Vu Ba Phu, Director General of the Trade Promotion Agency, highlighted that SMEs possess numerous advantages in the green transition, digital transformation to access the EU market.
Real estate businesses and macroeconomic challenges
The year 2024 marks a challenging period for real estate businesses, not only in Vietnam but also worldwide.
VINASME and VISA collaborated to promote financial solutions for small and medium-sized enterprises
On September 10th, at the Government Office Conference Center, the VINASME and the international card organization VISA will co-host a seminar titled "Payment and Financial Solutions for Small and Medium-sized Enterprises".
Hòa Phát Group leaders receive major pay hike during steel market crisis
Although the global steel industry is experiencing a crisis, Hòa Phát recorded a sharp increase in executive remuneration in the first half of 2024, with costs rising 3.4 times compared to the same period last year, reaching VND 112 billion.
Ho Chi Minh City: Economic recovery, yet the number of businesses exiting the market remains high
In the first eight months of the year, the number of businesses entering the market increased by 8.8%, but the number of businesses withdrawing also rose by 7.4%.
Businesses are the main actors and the greatest drivers of innovative startups
Dr. Đàm Quang Thắng – Chairman of the National Innovation Advisory Council has provided deep insights into the role of businesses within the innovative startup ecosystem.
General Secretary and President Tô Lâm: "Although it is a small and medium-sized business community, it is very large..."
On the afternoon of August 22, General Secretary and President Tô Lâm received a delegation of the Vietnam Association of Small and Medium Enterprises. This important and meaningful event was organized by the Business and Integration Magazine.
BIDV financed the construction of Cap Saint Jacques Complex in Vũng Tàu City
The signing ceremony for the credit contract to finance the project was organized by BIDV and the Development Investment Construction Joint Stock Corporation (DIC) — the project's investor — in Ho Chi Minh City on August 19, 2024.