Consumer credit booms, home appliance sales increase
Consumer credit soared by 65% in 2017, accounting for an increasingly high proportion of total outstanding loans, according to a report from the National Financial Supervision Council (NFSC).
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Ngoc Thanh in district 9, HCM City, bought a TV set at VND10.7 million on installment.
“I had enough money to pay at once. But I decided to buy on installment because of the zero percent interest rate. I just had to pay half the money for delivery. The remaining amount of money will be paid within six months,” she explained.
Like Thanh, more people are borrowing money from finance companies and commercial banks to buy home appliances, to repair houses, and to purchase cars and apartments as the lending interest rates have been eased and procedures simplified.
Those who want loans of tens of millions of dong to buy home appliances, smartphones and laptops have to spend 15-20 minutes only on procedures and only have to show identity card or driving license.
NFSC’s report on the financial market in 2017 showed that consumer loans increased by 65% in 2017 after rising by 50.2% in 2016, while the proportion of consumer credit in total outstanding loans increased from 12.3% in 2016 to 18% in 2017.
The loans provided by commercial banks to fund house purchases and repairs accounted for 53.8%. Loans were also used to buy household-use appliances and cars.
A report from Rong Viet Securities Company showed that consumer loans mostly come from commercial banks with US$23.27 billion disbursed. Some large joint stock banks are now focusing on developing retail banking and have finance companies.
As the disbursement for real estate projects has been put under tight control to prevent risks, commercial banks have shifted to boosting consumer lending.
According to Maybank Kim Eng Securities, consumer lending increased rapidly in the last three years after the interest rate ceiling.
As consumer credit is very promising, more and more finance companies have been established. Companies belonging to the Sai Gon – Hanoi Bank and Military Bank are planning to join the market.
HD Saison, the finance company belonging to HD Bank, made up 39% of HD Bank’s pretax profit (VND2.42 trillion).
Meanwhile, FE Credit made up 2/3 of profit of VP Bank in the third quarter of 2017.
NFSC estimated that the market share held by state-owned banks increased from 39% in 2016 to 45.7% in 2017.
Meanwhile, the market share of finance companies rose to 9.3% by the end of 2017.
