StoxPlus is pleased to introduce our third issue on Vietnam Consumer Finance (“CF”) Market report 2015. Our first issue was released in 2013, covering consumer finance (“CF”) market data up to 31/12/2011. Our 2013 report was the first in-depth sector research for consumer finance in Vietnam. Fast forward to this new edition of our report, StoxPlus provided an updated and comprehensive analysis on the small but fast-growing consumer finance market in Vietnam.

What’s new in this issue? In this issue, besides updated market size and competition dynamics, we provide an in-depth survey of existing CF products being offered by key players. The report is expected to provide useful market information for new companies looking to penetrate into the market, as well as existing CF players to get an updated view on CF competition.  

Market size: Vietnam consumer loans outstanding has reached US$10.4 billion in August 2014 and this industry is poised for growth (increasing by 18% compared to December 2013). The high growth of consumer loans is due to the shift from corporate lending to consumer lending. The corporate lending environment saw a downward trend over the three-year period, from 2012 to 2014.

Competition dynamics:There are 4 types of players providing consumer finance services: local banks, foreign banks, finance companies. Local commercial banks are aggressively acquiring finance companies and develop business plans to penetrate into the CF market. This year, besides banks and finance companies, there are new players such as MobiVi who leverage online technology to improve efficiency of the CF business model.

Finance companies have the fastest growth in consumer loans compared to other types of player, accounting for 10% of total consumer loans. According to data of loan outstanding of finance companies, PPF is still the market leader with the highest growth rate of 23.1% in 2014 compared to 2013. VP Finance Company (i.e. FE Credit) ranked second among finance companies in terms of loan outstanding as reported to the SBV. However, according to our own analysis, the actual loan outstanding of FE Credit is much larger, and that they should be ranked as CF market leader.

Consumer finance product survey: Besides updated information on market size and competition, in order to gain deeper understanding of the attributes that differentiate different CF players, we surveyed the offered products from selected financial institutions as well. The key findings include:   

• In our detailed survey of CF products, finance companies’ interest rates range from 13% to as much as 63 – 70% APR. Home Credit (PPF) has the highest interest rates, while ACS Trading and MobiVi offering the lowest rate of interest. In return to the longer appraisal time, ACS offers the appropriate interest in order to compete with the rest of the market.
• HD Saison and FE Credit have the simplest application procedures. Meanwhile, Prudential Finance has the most complicated procedure in terms of required documents, comparable to those of banks.
• In terms of appraisal time, MobiVi is the most efficient in their loan appraising process due to their unique business model. Prudential Finance and Mirae Asset have the longest time to yes, even longer than that of some banks.
• CF companies also build up their sales channels and payment options. There are currently 5 main sales channels being used by existing CF players. CF companies also provide a variety of payment methods to increase the convenience for customers. Payoo and MoMo are the two e-wallet providers most frequently used by CF companies

Looking forward:

• Cash loan and e-wallet are expected to continue as emerging product trends and gain momentum reshape the industry: As the rise of ecommerce, e-wallet would be an essential infrastructure for the online/mobile consumer finance. The appearance of Payoo and MoMo could serve as a loan distribution as well as payment channel for cash loan business
• The  market still poses many key challenges and issues that need to be overcome:  Rural areas have been neglected in Vietnam, but there has a great potential for the retailers, particularly for domestic firms. On the other hand, operational problems such as risk management or sales channel are still under concern. Personal credit bureau would be critical for consumer finance companies to manage their risk and prevent imposing risks on the whole financial system.