In late September, the Vietnam Technological and Commercial Joint Stock Bank (Techcombank) reportedly sold its stake in the financial arm TechcomFinance to the Republic of Korea’s credit firm Lotte Card, a member of Lotte Group, for 87.5 billion won or 1.73 trillion VND (76.9 million USD).
After being purchased by Techcombank in January 2015 from the Vietnam National Chemical Group (Vinachem), TechcomFinance has 600 billion VND in charter capital.
The deal will allow Lotte Card to issue credit cards, provide installment financing services and consumer finance in Vietnam, and target the local consumer finance sector, valued at 744 trillion VND (32.8 billion USD) by June 30, 2017, equal to 12.4 percent of the Vietnamese economy’s credit balance.
In mid-September, MCredit – the financial arm of the Military Commercial Joint Stock Bank (MBBank) – officially changed its name to MB Shinsei Consumer Finance Co Ltd, a step that helped MBBank completed selling a 49 percent stake in MB Shinsei Consumer Finance to the Japanese bank Shinsei. The deal between the two banks was signed in November 2016.
Local consumer finance companies have also made their way to expanding market coverage, such as FE Credit – the consumer finance arm of Vietnam Prosperity Joint Stock Commercial Bank (VPBank).
FE Credit in July 2017 raised its charter capital to 4.49 trillion VND from the previous 2.79 trillion VND. It has continuously increased charter capital from 1 trillion VND since being acquired by VPBank from the Vietnam National Coal and Mineral Industries Group (Vinacomin) in June 2014.
According to FE Credit, the competition in Vietnam’s consumer finance industry will get fiercer as more players enter the country, reducing market shares and comparative advantages of those already present in the market.
Economic and financial specialist Can Van Luc said at a recent online conference that consumer finance would help people afford their needs and manage their finances better.
It would further develop the sector of individual consumer spending - which accounted 67-68 percent of Vietnam’s gross domestic product (GDP) – having a positive impact on the country’s socio-economic development and stablising the financial market, he said.
According to analysts, the consumer finance business still has room to grow and the participation of both domestic and foreign companies will help boost the sector’s influence on the Vietnamese economy.