The appearance of big foreign retail chains like CircleK, Shop&Go, FamilyMart and Aeon and the strong rise of Vietnamese chains Vinamart, Co-op and The Gioi Di Dong have fostered the development of consumer credit in Vietnam, according to the State Bank of Vietnam. StoxPlus’ 2016 report on Vietnam’s consumer credit showed that the credit market has seen amazing leaps in recent years.
The outstanding loans of Vietnam consumer finance soared from $7.3 billion in 2012 to $26.55 billion in 2016. Though it still accounts for a small proportion (9.8 percent by the end of 2016), consumer finance has been growing very quickly.
Nguyen Tu Anh, deputy director of SBV’s Monetary Policy Department, confirmed that consumer credit has been developing strongly thanks to many favorable conditions.
Vietnam has 92 million people with 70 percent of the population aged 15-64, while its GDP growth rate has been stable at over 6 percent in recent years.
Anh cited research by economist Nguyen Thi Hien and her co-workers that shows the consumer credit market’s rapid development since 2011. The growth rate was 30 percent per annum in 2011-2014 and 59 percent in 2015.
The total outstanding consumer loans granted to customers in 2015 was VND583 trillion, equivalent to 20.5 percent of the consumption value of individuals and households.
If not counting housing loans as per international practice, consumer outstanding loans in 2015 would total VND272.241 trillion (equivalent to 6.62 percent of GDP). The figure is higher than that of China (6 percent) and Japan, but much lower than other developed countries, including the US (17 percent), Europe (14 percent), and Korea over (20 percent).
The constant increase of consumption has led to higher demand for consumer loans. Meanwhile, the stable and high economic growth rate helps consolidate people’s belief in their income in the future, thus encouraging them to borrow money.
Vietnam is in a so-called golden population period with a high percentage of young consumers.
As the growth rate of lending to fund production and business has slowed down for several reasons, banks tend to increase consumer credit to offset the slowdown.
FE Credit is leading the consumer finance market with $1.4 billion worth of loans provided in 2016, accounting for 48 percent of market share.
Its rivals, Home Credit, HD Saison and Prudential, hold 15.7 percent, 12.2 percent and 8.1 percent, respectively, according to StoxPlus.