United Overseas Bank Ltd (UOB) recently completed the acquisition of Citigroup’s consumer banking business in Vietnam, which includes Citibank’s unsecured and secured lending portfolios, wealth management business, and retail deposit businesses.
HANOI: Large foreign financial groups are actively penetrating the Vietnamese consumer finance market, which has significantly helped accelerate the digitalisation of the country’s financial services.
United Overseas Bank Ltd (UOB) recently completed the acquisition of Citigroup’s consumer banking business in Vietnam, which includes Citibank’s unsecured and secured lending portfolios, wealth management business, and retail deposit businesses.
Multinational financial groups within the Asian region are also strongly promoting mergers and acquisitions and capital contributions to Vietnamese commercial banks to bolster their consumer lending activities.
Japan’s Sumitomo Mitsui (SMBC) reached an agreement to buy more than one billion shares of Vietnam Prosperity Commercial Joint Stock Bank (VPBank), equivalent to 5% of the bank, thoibaonganhang.vn reported.
Neither party has made an official announcement on the transfer, but sources said the value of the deal could reach US$1.4bil (RM6.2bil) and could be completed by the end of this month.
In early 2021, through SMBC Consumer Finance, MSBC spent US$1.37bil (RM6bil) to acquire 49% stake in VPBank’s subsidiary FE Credit.
This indicates that the purchase of more than one billion VPBank shares is most likely part of the strategy to boost the consumer finance unit that SMBC has been building up for months.
In addition to SMBC, other large financial groups, such as MUFG from Japan, Srisawad of Thailand and KB Kookmin Card of South Korea, have also actively hunted consumer finance units of Vietnamese banks.
In August 2021, Saigon Hanoi Commercial Joint Stock Bank (SHB) signed an agreement to transfer 100% of the capital at SHB Finance to MUFG’s Krungsri of Thailand.
At the end of 2022, the State Bank of Vietnam (SBV) approved the list of SHB leaders, including members from Krungsri. This transfer of SHB capital at SHB Finance to Krungsri is to be completed in 2025.
According to experts, with the active participation of multinational corporations: “The Vietnam consumer finance market will see a strong uptick in diversified products and services and a strong development in microfinance digitalisation.”
Besides large corporations from Japan, South Korea and Thailand, large Vietnamese groups and corporations, such as Masan, FPT, Viettel and Bamboo, have also made big investments in the consumer finance segment.
In February, Masan invested US$105mil (RM464.6mil) in Trust IQ to develop artificial intelligence applications in retail and consumer finance. Masan has also cooperated with Techcombank to create the WINLife ecosystem to exploit the personal financial needs of customers who are using Masan’s retail and consumer services.
Investment in digitalisation is crucial for large financial companies to compete and expand their market shares as a large number of customers with consumer finance needs have turned to cashless applications and modern borrowing technologies.
Financial companies investing heavily in digitalisation, such as VietCredit and MCredit, are enjoying positive growth.
In particular, MCredit, with the backing of MB and Shinsei Bank, has applied artificial intelligence and cloud computing applications to serve more than two million customers, which has helped MCredit rank third among the group of finance companies with the largest market share in Vietnam.
Despite being smaller in size, VietCredit has also seen remarkable growth, with a recorded loan balance of more than 4.4 trillion Vietnamese dong (RM827mil) as of the end of 2022 and pre-tax profit growth of 52% over the same period in 2021.
FE Credit, Home Credit and HD Saison have also had to make big investments in developing new digital application platforms.
FE Credit has invested in a Ubank application to replace FE Credit Mobile and become a major player in the region in the next few years.
Meanwhile, HDSaison invested in a new application on the mobile platform to exploit a group of small traders in traditional markets. HDSaison last year successfully added 1.2 million new customers to develop consumer loans. — Viet Nam News/ANN
