What’s new in this issue? Consumer Finance is growing in Vietnam but is still small compared to other regional markets and growth opportunity is still here. In the year 2017, Vietnam’s Consumer Finance for 17% of the National Loan Book, driven by strong demand increases in housing and home improvement loans, as well as secured and unsecured cash loans.

Usually, banks focus on serving the middle income segments and above, leaving behind 48% of the population who are unbanked, low-income and have the potential to be CF customers. However, since banks are the traditional go-to source for financing, in 2017 finance companies only accounted for approximately 8.4% of the total outstanding consumer loans, as opposed to 91.6% of commercial banks. Nevertheless the market is becoming more competitive and new entrants are still incoming.

Consumer finance market has experienced changes in portfolio in 2017

• Housing loans increased in tandem with the overall growth thanks to the warm real estate market
• Home appliances loans and Vehicle loans had negative growth as the market becomes more saturated
• Meanwhile, finance companies are focusing on developing the market for credit card and cash loans
• For the foreseeable future, POS remains a key entry product, while Finance Companies are now eyeing the mobile and digital channels such as IPS and P2P for the next move

The rush for market share has now been replaced by the focus on the efficiency of business model and better risk management

• Leading Finance companies are now past the market share grabbing phase and entering a “professionalization” phase, with different sales model and risk models applied

• In this new phase, the digitization as well as the rise of Fintech and mobile payment would shape the Consumer Finance market

Multiple M&As have happened in 2017 as foreign investors are interested in acquiring CF licenses, indicating stronger competition in coming years

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