Has consumer lending "bottomed out"?

In the latest updated report on the consumer finance market by Fiingroup, experts said that Vietnam's consumer finance market has experienced the most challenging year in the past decade due to the context of slow economic growth and an unfavorable credit business environment.

By the end of 2023, total outstanding loans of consumer finance companies had narrowed by more than 9% compared to the previous year in the context of weak credit demand, declining credit quality of borrowers, and increasing bad debt ratios, forcing credit institutions to tighten lending conditions.

From a growth rate of nearly 30% in 2019, consumer credit growth fluctuated and then decreased by 9.1% in 2023 - considered the most difficult year in the past decade. Corporate income fell sharply, profits also turned negative when many companies reported losses of thousands of billions of dong after the "golden goose" period.

Consumer loan demand is forecast to recover better in the second half of the year.

The average bad debt ratio of financial companies increased from about 3% to about 11% in 2023....

However, up to this point, Vietnam's consumer finance market is forecast to have bottomed out and is preparing for a new growth cycle, albeit with difficulties. The recovery potential thanks to the consumer loan demand of customers is forecast to recover positively in the second half of 2024.

"In the short term, the recovery path will be supported by positive signs from the macroeconomic environment, including the recovery of the manufacturing and export sectors, which is expected to improve credit quality and credit demand of workers, unskilled laborers, and low- to middle-income earners," Fiingroup experts said.

Notably, after a series of mergers and acquisitions in the market, with the change of ownership of financial companies, the market will continue to witness stronger participation of foreign investors, along with the divestment trend of some domestic banks from their consumer finance branches.

According to the reporter's records, recently, a series of changes of ownership in the consumer finance market have taken place. Home Credit Group transferred 100% of its capital contribution at Home Credit Vietnam Finance Company to The Siam Commercial Bank Public Company Limited (SCB) of Thailand; SeABank sold all of its capital contribution at Post and Telecommunication Finance Company (PTF) to AEON Financial Service Co., Ltd (Japan); SHB transferred 50% of the charter capital of SHB Finance Company to Krungsri Bank of Thailand.

Previously, VPBank also transferred 49% of FE Credit's charter capital to a subsidiary of SMBC Group (Japan)...

Source: https://nld.com.vn/cho-vay-tieu-dung-da-thoat-day-196240701165243473.htm