Why did FiinRatings upgrade F88's credit outlook to "favorable"?

From “stable” to “favorable”: F88 affirms its position in the market

FiinRatings, the leading credit rating agency in Vietnam, made this decision based on many key factors such as improved asset quality, market leadership, solid capital mobilization capacity and effective risk management of F88 Trading Joint Stock Company (F88). This is a positive signal showing the sustainable development of F88, especially in the context of fierce competition in the consumer finance market.

“We assess that F88's capital and liquidity have improved somewhat compared to the previous credit rating, thanks to the company's continued success in diversifying its capital mobilization sources from domestic and foreign partners, along with its plan to increase charter capital in 2026 and a significant improvement in its average cost of capital mobilization,” FiinRatings' announcement explained, emphasizing that the diversity of capital mobilization sources provides a stable capital foundation for business operations and ensures solid liquidity.

In addition, FiinRatings said F88's leading position in the alternative lending industry, with a target of 1,000 stores by 2026, is also an important factor that makes the organization upgrade F88's credit rating outlook.

F88 transaction office

Specifically, in 2024, F88 recorded a loan balance growth rate of up to 22.7%, much higher than the average growth rate of the consumer finance industry of 3.84%. F88 also diversified its revenue sources, in which revenue from insurance services increased by 11.8%, contributing 9.5% of total revenue. The Debt/Equity ratio remained at 1.7 times, lower than the median of consumer finance companies at 4.6 times, demonstrating a balance between safe and efficient capital use. In the liquidity stress test, FiinRatings assumed a 50% decrease in loan mobilization and no increase in charter capital in 2026, resulting in F88 maintaining stable liquidity and ensuring fulfillment of obligations to stakeholders.

In terms of profitability, F88 achieved a profit of VND 351.5 billion, along with a sharp reduction in operating expenses (CIR). Important financial indicators such as NIM, ROE and ROA have all improved significantly, surpassing 2023 and higher than the industry average. This helps to strengthen investors' confidence in F88's business operations.

What does FiinRatings expect from F88 in the future?

“According to our forecast, F88 will continue to record high after-tax profit of VND500-700 billion in the 2025-2026 period thanks to its loan expansion strategy and effective cost management,” FiinRatings commented in the announcement.

To achieve such high performance, F88 has maintained a strict risk management policy that has been commented by a credit rating company as “significantly improving its ability to manage and handle bad debt”.

FiinRatings' announcement added that F88 has maintained stable asset quality, thanks to a strong improvement in customer repayment capacity, as well as governance, tightening of business risk appetite and effective coordination between departments. Debt collection rate also recovered significantly, reaching 41.7% compared to 15.6% in 2023. This helps strengthen investor confidence in F88's business operations.

“We expect F88 to continue to improve its debt collection and credit loss capabilities, as well as maintain prudent policies on classification, provisioning, and bad debt handling. As a result, the average credit cost/debt balance may decrease to 19% by 2026,” FiinRatings wrote.

The fact that FiinRatings upgraded its credit outlook to “Favourable” is a testament to F88’s stable development and effective business strategy. This is not only an opportunity for F88 to increase its competitive advantage but also helps the business enhance its reputation in the capital market. In the context of the consumer finance industry continuing to fluctuate, F88 is demonstrating its flexible adaptability and strong growth potential in the future.

F88 Business Joint Stock Company is a leading alternative lending company in Vietnam. F88 focuses on providing secured loans through vehicle registration, distributing insurance products and providing other support services. As of the end of December 2024, F88 has 868 stores in 63 provinces and cities in Vietnam.

Ngoc Anh

Source: https://congthuong.vn/vi-sao-fiinratings-nang-trien-vong-tin-nhiem-f88-sang-thuan-loi-381177.html