Experts say the legal framework for consumer financing is still not open enough, creating difficulties in attracting foreign capital.
Deputy CEO of Ernst & Young Nguyen Thuy Duong said the high consumer credit growth rate in recent years has attracted many regional investors.
More M&A deals have occurred in the last two years. Shinhan Bank, for example, took over the retail banking division of ANZ, while Lotte and Shinhan bought TechcomFinance and Prudential Finance.
The market also welcomed Japanese firms, including Credit Saison, which acquired 49 percent of HD Finance’s shares, and Shinsei Bank, which teamed up with the Military Bank to set up a joint venture.
FE Credit is known as a pioneer in calling for capital from large financial institutions. Since 2016, it has borrowed $350 million from institutions, including Credit Suisse, Deutsche Bank and Lion Asia, and 15 banks in Asia Pacific.
The loan to FE Credit is the most valuable loan that Deutsche Bank and Credit Suisse have provided to a Vietnamese consumer finance company.
It is estimated that by 2019, Vietnam’s consumer lending market would be valued at $44 billion, or VND1,000 trillion. The CAGR (Compound annual growth rate) of the market was 44 percent in 2013-2016, and the ratio of finance companies was 91 percent.
Analysts say if finance companies can mobilize huge capital from foreign prestigious investors, they will have stronger resources to build attractive business strategies and offer better lending interest rates. If so, attracting foreign capital will also bring benefits to consumers.
However, the legal framework is believed to be the major obstacle that makes finance companies find it difficult to lure foreign investors.
Can Van Luc, a finance expert, has urged the government to instruct ministries to set up a national strategy on finance development in order to increase official finance sources.
Statistics show that the consumer lending scale in Vietnam remains modest compared with Southeast Asian countries and the US, valued at $43 billion as of late 2017.
After the restructuring of the credit institution system in 2011-2015, many finance companies were reshuffled through M&As, which drove the consumer finance sector to healthy development.
According to the Credit Information Center (CIC), consumer credit has grown by 36 percent compared with early 2017.
Deputy head of the Banking Strategy Institute Pham Xuan Hoe said lending has increased, but the proportion remains low in comparison with other countries.
According to a report on Vietnamnet