Consumer lending to grow again in 2021
Consumer lending to grow again in 2021
The consumer finance market will have the chance to grow again in 2021 thanks to the country's economic recovery, experts forecast. 
Vo Dai Luoc, former director of the Institute of World Economics and Politics, said the consumer finance market would resume rising this year as economic growth is expected at 6 per cent against 2.91 per cent last year.
In 2020, income of consumers was adversely affected by the COVID-19 pandemic, causing a decreasing demand for consumer loans.
According to Luoc, last year, the agriculture, forestry and fishery sector increased by 2.68 per cent, contributing 13.5 per cent to the growth rate of the whole economy. The figures for the industry-construction and services sectors were 3.98 per cent and 2.34 per cent, contributing 53 per cent and 33.5 per cent, respectively.
Besides the processing and manufacturing industries, the services sector, including wholesale and retail, financial activities, banking and insurance, would be continually one main driver of economic growth this year. Thus, the consumer finance market and consumer services would certainly play an important role in the economy, Luoc said.
According to economist Vu Dinh Anh, in the context of declining income due to the pandemic, consumer lending is an important factor to stimulate the increase in domestic aggregate demand through a rise in goods retail and consumption.
Despite higher risks than bank loans, the consumer lending market is still attractive to investors thanks to its profitability.
According to the State Bank of Viet Nam’s statistics, finance companies have the highest profitability among credit institutions in Viet Nam. The latest updates available in October showed return on asset (ROA) and return on revenue (ROE) of finance companies were respectively 2.19 per cent and 10.55 per cent, highest among credit institutions. The ROA of finance companies was even 2.8 times higher than commercial banks.
Sixteen finance companies are licensed to provide consumer lending with their total charter capital worth more than VND22 trillion (US$948 million) as of the end of 2020.
Those with the largest charter capital include FE Credit (VND7.328 trillion), SBIC Finance (VND2.532 trillion), EVN FC (VND2.5 trillion), Home Credit (VND2.05 trillion) and HD Saison (VND1.4 trillion).
A number of banks have launched finance companies, such as VP Bank with FE Credit, HDBank with HD Saison, SHB with SHB Finance and MBBank with Mcredit.
Banking expert Can Van Luc said Viet Nam’s consumer credit market had significant potential for development. Consumer loans are estimated to account for around 18-20 per cent of the total outstanding loans in the economy.
