Banks not in haste to establish financial firms
Home Credit is one of two financial leading players currently in consumer finance segment
At its recent annual general shareholders’ (AGM) meeting, state-owned Military Commercial Joint Stock Bank (MB Bank) set to achieve VND6.8 trillion ($302 million) in profit, with VND300 billion ($13.3 million) to come from its consumer finance firm Mcredit.
Leveraging the Japanese partner and existing network advantages, Mcredit aims to be named among the top three players in the consumer finance segment in Vietnam in the not-so-distant future, according to the bank’s general director Luu Trung Thai.
Albeit Vietnam is currently home to 16 consumer finance firms, more than 80 per cent of the market share is on the hands of four leading players.
Currently, FE Credit and Home Credit are the two leading players in this segment, each with annual profit figures in the range of trillions of Vietnam dong. Last year, FE Credit counted VND4 trillion ($177.7 million) in profit.
Industry experts assumed that as Mcredit has mainly served military customers and businesses and its products and services show no particular distinction, it would be hard for the company to seize a larger market share.
Albeit Vietnam is currently home to 16 consumer finance firms, more than 80 per cent of the market share is in the hands of four major players, including FE Credit, Home Credit, HDSaison, and Prudential.
In addition, consumer finance firms are facing stiff competition from fintech firms which have been mushrooming recently, whereas local banks witnessed a phenomenal growth in retail.
According to Nguyen Xuan Hoe, deputy director of the Banking Strategy Institute, despite strong growth, financial companies currently only hold 1 per cent of the credit market. In the consumer credit segment, more than 90 per cent of the market is in the hands of commercial banks.
A recent survey by the National Financial Supervisory Commission also shows that the market share of financial firms has fallen from 9.3 in 2016 to just 7.6 per cent in late 2017.
As banks are racing to boost retail activities, focusing on inpidual lending, financial firms are risking dwindling market shares. This explains why many banks like SHB and Maritime Bank have yet to press their consumer finance firms into service, though the purchases have taken place a long time ago.
Last year, Techcombank even sold its member unit Techcom Finance to a foreign partner and confirmed not pursuing the high-risk, high-profit business segment.
CEO of privately-held TPBank, Nguyen Hung, told VIR that the bank commits to pushing up the retail segment to boost growth, without focusing on risky segments.
According to economist Can Van Luc, many banks are doing a smart job with retail and consumer finance without the need to establish or buy financial companies. It depends on each bank’s development strategy.
Related News
Shareholders expect the shareholder meeting season
10:20 | 18/03/2024 Headlines
Credit and access to credit: A problem for banks and businesses
15:24 | 19/03/2024 Finance
Banks reduce revenue from insurance services
10:02 | 12/03/2024 Finance
Customs strives to expand utilities in e-tax payment
08:56 | 25/02/2024 Customs
Latest News
Strive to effectively implement Global Minimum Tax in Vietnam
10:22 | 10/05/2024 Finance
State Treasury raises over $890 million worth of G-bonds in April
14:46 | 09/05/2024 Finance
State expenditure in the first four months of 2024 reaches VND522.2 trillion
09:54 | 09/05/2024 Finance
SBV ready to intervene to stabilise foreign exchange rate: Deputy Governor
15:41 | 08/05/2024 Finance
More News
Warn about the fraudulent tricks of stock investment
16:30 | 07/05/2024 Finance
State budget revenue estimated at VND733.4 trillion
14:40 | 06/05/2024 Finance
Six localities should expedite site clearance and public investment
10:36 | 05/05/2024 Finance
Banks announce plans to significantly increase capital
15:11 | 04/05/2024 Finance
Minister of Finance Ho Duc Phoc receives Ambassador Extraordinary and Plenipotentiary of Japan to Vietnam
13:47 | 04/05/2024 Finance
Banks strengthen information security systems
14:55 | 03/05/2024 Finance
“Opportune environment” for growth of insurance enterprises
10:15 | 03/05/2024 Finance
Closely monitoring fluctuations to calculate the appropriate time to adjust prices
15:35 | 02/05/2024 Finance
Strictly monitor market fluctuations to appropriately adjust prices
14:46 | 27/04/2024 Finance
Your care
Strive to effectively implement Global Minimum Tax in Vietnam
10:22 | 10/05/2024 Finance
State Treasury raises over $890 million worth of G-bonds in April
14:46 | 09/05/2024 Finance
State expenditure in the first four months of 2024 reaches VND522.2 trillion
09:54 | 09/05/2024 Finance
SBV ready to intervene to stabilise foreign exchange rate: Deputy Governor
15:41 | 08/05/2024 Finance
Warn about the fraudulent tricks of stock investment
16:30 | 07/05/2024 Finance