Consumer credit with "huge" interest

Profits of some consumer companies are growing strongly again and the expected recovery in consumer capital demand will have a positive impact on profits this year.

Vietnam's consumer finance market still shows strong attraction with total outstanding loans serving life reaching 2.8 million billion VND.

Profit increase

Home Credit Vietnam Finance Company Limited has just announced its audited financial report for 2024 to the Hanoi Stock Exchange (HNX). The report shows that the Company's total outstanding credit balance in 2024 increased by 12.4% compared to the previous year thanks to the promotion of lending to individual customers. The bad debt ratio decreased sharply to 1.76% by the end of 2024, from 2.49% in 2023 and is much lower than the average of financial companies.

Notably, Home Credit Vietnam recorded a profit after tax of VND1,290 billion, 3.5 times higher than in 2023 (VND375 billion), just 1 year after announcing the sale to the Bank of Thailand (SCB). The company said that the above results came from the effectiveness of its flexible business strategy and risk management capabilities. The positive profit also reflects the picture of the consumer finance market recovering after a difficult period.

HDBank said that in 2024, the Bank will achieve VND 16,730 billion in pre-tax profit, an increase of 28.5% compared to 2023 and complete 106% of the plan assigned by shareholders. Particularly in the consumer finance segment, subsidiary HD Saison (HDBank owns 50% of capital) continues to affirm its leading position in the market in terms of profit, reaching VND 1,200 billion before tax, a sharp increase of 83.9% compared to 2023. This result once again shows HD Saison's sustainable development strategy, ability to maintain high growth, and effective risk management.

Meanwhile, according to the audited 2024 report, FE Credit achieved pre-tax profit of nearly VND 515 billion. The strong recovery after this restructuring period comes from credit growth, efforts to improve asset quality, optimize costs and risk management, and effective debt collection. This is the result of a comprehensive restructuring process over two years (2023, 2024) and support from two large domestic and foreign financial institutions, VPBank and SMBC Consumer Finance Company (SMBC CF, under Sumitomo Mitsui Financial Group).

Vietcap Securities Company highly appreciated the positive impact of FE Credit on the net interest margin (NIM) and asset quality of the merged bank. The merged bank's non-interest income also benefited from the financial company's recovery efforts.

According to the performance report, EVNFinance Company's pre-tax profit in the fourth quarter of 2024 reached more than 166 billion VND, and the accumulated profit for the whole year of 2024 reached 703.7 billion VND.

Motivation for 2025

FE Credit leaders said that in 2025, the Company aims to maintain growth momentum and develop sustainably. At the same time, the Company continues to optimize its business model, control credit risks, diversify its product portfolio, focus on digital transformation, and enhance customer experience on a large scale. SMBC, with its global vision and international financial management experience, continues to open up many opportunities to continuously move forward. With improved capital demand, VPBank expects that from 2025, FE Credit's profit will return to VND 3,000-4,000 billion before tax.

Favorable environment for consumer credit

In 2025, the Government targets GDP growth of 8% or more, while the banking sector strives for credit growth of 16%. This will create a favorable environment for consumer credit as employment and income of workers increase and people's purchasing power improves. At the same time, expansionary monetary and fiscal policies continue to strongly support consumer lending demand, creating great opportunities.

The consumer finance market in Vietnam still shows strong attraction with total outstanding loans serving consumer life reaching VND2.8 million billion, accounting for 20% of total outstanding loans of the whole economy as of mid-last year. Of which, commercial banks provide 94% and consumer finance companies contribute about 4.8%, with total outstanding loans of VND139,000 billion. Thus, consumer credit still depends heavily on the banking system, while finance companies, although playing an important role in reaching this low-income customer group, face many difficulties.

The growth potential of the consumer finance industry in Vietnam is still huge. According to a report by FiinGroup, Vietnam's consumer lending penetration rate is still relatively low compared to other countries in Asia-Pacific, signaling abundant growth potential. Entering 2025, the consumer finance industry in general is expected to accelerate its recovery as the macro environment improves, consumer demand and household incomes improve.

MBS Securities Company forecasts that consumer credit will pick up in 2025 due to economic recovery, accelerated GDP growth and improved household income. These factors will strongly boost demand for consumer finance. In addition, the Government's support and reform policies in the consumer finance sector will encourage loan demand. Specifically, for loans under VND100 million, customers do not need to provide a detailed capital usage plan.

However, according to financial analysts, although the consumer credit market is on the path to recovery, it still faces significant challenges. Violations from previous years have made customers highly wary of consumer credit, especially financial companies. Expanding consumer credit to low-income customers or those with weak credit records carries a high risk of bad debt, so caution is needed.

Source: https://baodautu.vn/tin-dung-tieu-dung-lai-khung-d264595.html