FiinRatings rates Home Credit Vietnam A with stable outlook

Strong growth, top profitability

FiinRatings recognized Home Credit Vietnam as the most effective recovery enterprise in the consumer finance industry in 2024. The company achieved a net profit of VND 1,290.9 billion, an increase of nearly 244% compared to 2023 (VND 375.3 billion).

Home Credit has just been rated A by FiinRatings with stable outlook. Photo: Home Credit

Outstanding loan growth was also impressive, reaching 13.8%, significantly higher than FE Credit (10.3%) and HDSaison (13.2%). With this result, Home Credit Vietnam ranked third in terms of outstanding consumer finance loans and fourth in the industry in terms of total outstanding loan size, accounting for 9.6% market share by the end of 2024.

The product portfolio is flexibly distributed: cash loans account for more than 53%, consumer loans 24.7%, motorbike purchases 9% and revolving credit 13.1%. Net fee income from insurance increased from 3.5% to 14% of total operating income, thanks to a wide distribution network of 13,000 partners and 21,000 service points (POS), reaching more than 16 million customers in the past 17 years. This diversity helps the business reduce dependence on interest, increase cash flow sustainability and stabilize long-term profits.

In terms of efficiency, Home Credit Vietnam recorded a net interest margin (NIM) of 28.1% - the highest in the industry, far exceeding the average of 17.8%. Return on assets (ROA) reached 4.9%, while return on equity (ROE) stood at 18.5%.

Although the cost-to-income ratio (CIR) is at 51.5% due to strong investment in digital transformation, FiinRatings forecasts that this ratio will decrease to 48.6 - 49.7% in the period of 2025 - 2026. This is a signal that operational efficiency will continue to improve, strengthening the company's long-term competitiveness.

Well controlled risks, solid capital base

FiinRatings raised the “risk position” factor in its credit rating by two notches, emphasizing that: “Home Credit Vietnam Finance Company Limited’s risk position is assessed as very good, reflecting its prudent risk appetite, quality customer portfolio and transparent governance policy.”

The average non-performing loan (NPL) ratio in the 2020–2024 period is only 3.1%, much lower than the industry average of 7.5%. In 2024 alone, the NPL ratio will decrease to 1.8%. The problem debt ratio (groups 2–5) will decrease from 11.3% in 2022 to 6.5% in 2024.

The average bad debt recovery rate over the past 5 years has reached 17.7%, nearly double the industry average of 9.9%. FiinRatings attributed this success to selective lending policies, the application of big data technology to credit assessment, and an effective fraud control system. In addition, the average bad debt write-off rate over the past 5 years has been maintained at around 10.3%, equivalent to the general market level.

In terms of capital, Home Credit Vietnam has a capital adequacy ratio (CAR) of 27.5% by the end of 2024, the highest in the industry, compared to FE Credit (14.4%) and Mcredit (13.4%). The financial leverage ratio is only 2.8 times, lower than the industry average of 3.9 times. In the capital structure, 98.3% is Tier 1 capital. According to FiinRatings, the company's capital position is not only stable but also has the potential to continue to improve after completing the transfer to SCB.

The company’s liquidity is classified as “adequate”, with an average liquid asset/liability ratio of 16.9% and liquid asset/capital ratio of 19.2%, both exceeding the industry average. Despite its relatively high dependence on wholesale funding (82%), Home Credit Vietnam has been gradually reducing this ratio since 2022, while maintaining solid liquidity capacity thanks to a reasonable contingency plan.

Mr. Pham Ngoc Khang, General Director of Home Credit Vietnam, said: “FiinRatings’ rating of A with a stable outlook is a testament to Home Credit Vietnam’s journey to build sustainable growth. With a solid financial foundation and leading risk and data management capabilities, Home Credit has achieved its growth targets in 2024. We will continue to put customers at the center of all activities, through innovative products, providing flexible financial solutions for customers’ daily and long-term needs."

Source: https://baodautu.vn/fiinratings-xep-hang-a-cho-home-credit-viet-nam-voi-trien-vong-on-dinh-d283732.html