A staff member of consumer finance provider Home Credit Vietnam introduces the company’s products to customers. The Vietnamese market has continuously seen changes of owners of consumer financial companies, including Home Credit Vietnam, in recent years. Photo cafef.vn

HÀ NỘI — Though Việt Nam’s consumer lending has faced difficulties, merger and acquisition (M&A) deals of consumer financial companies have still taken place vibrantly, reflecting the potential of the Vietnamese consumer lending market in the future.

Czech Republic consumer finance provider Home Credit Group has recently announced it will sell its Home Credit Vietnam to the Siam Commercial Bank Public Company Limited (SCB), part of SCBX Public Company Limited (SCBX), for approximately 800 million euros (US$866 million). The deal is expected to be completed in the first half of 2025, subject to regulatory approvals in Việt Nam and Thailand.

Home Credit Vietnam holds the second largest market share in the Vietnamese consumer finance sector with 15 million customers, or approximately 14 per cent of the total market.

Meanwhile, SCBX is SCB’s parent company and one of Thailand’s leading financial technology groups. SCB is the fourth largest bank in Thailand, measured by total assets.

Besides Home Credit Vietnam, the Vietnamese market has recently also seen the Southeast Asia Commercial Joint Stock Bank (SeABank) sign a contract to transfer its entire capital contribution in the Postal Financial Limited Liability Company (PTF) at a price of VNĐ4.3 trillion to AEON Financial Service Co, a subsidiary of AEON Group.

Besides the two above deals, the Vietnamese consumer lending market has continuously recorded changes of owners of consumer financial companies in recent years, with newcomers mostly from Thailand or Japan. Notably, Saigon - Hanoi Bank (SHB) in 2023 transferred 50 per cent of charter capital of Saigon - Hanoi Commercial Joint Stock Bank Finance Company Limited (SHB Finance) to Krungsri Bank of Thailand; and Vietnam Prosperity Bank (VPBank) in 2021 transferred 49 per cent of FE Credit's charter capital to a subsidiary of SMBC Group (Japan). This deal brought VPBank tens of trillions of Vietnamese đồng.

Merger and acquisition (M&A) deals have taken place in a context that the consumer lending market has faced many difficulties. Sharing at a recent conference to promote credit growth in the banking industry in 2024, Nguyễn Đức Vinh, General Director of VPBank, said the revenue of 16 financial companies operating in the Vietnamese market all decreased sharply in 2023. FE Credit was among them when its loan demand declined and borrowers' ability to repay their debts was very low.

According to Vinh, financial companies do not dare to promote lending when market risks increase. He expected synchronous policies to be issued to resolve the debt recovery.

Nguyễn Quốc Hùng, General Secretary of the Vietnam Banks Association, said consumer lending is facing increasing pressure of bad debts when the number of customers who deliberately do not repay their debts is increasing significantly. This situation forces financial companies to tighten appraisals, which causes lending to become increasingly difficult.

Therefore, Hùng also said there is a need for a synchronous solution to remove problems in the consumer lending. — VNS