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Banking & Finance

FE CREDIT posts improved earnings power and quality in 1H

Released at: 11:21, 02/10/2019

FE CREDIT posts improved earnings power and quality in 1H

Photo: FE CREDIT

Consumer lender releases first half business results.

by Hung Cao

FE CREDIT has announced continued growth momentum in the first half of 2019, along with strong growth in profitability - revealing much about the company’s prospects in the years to come.

The loan book without institutional loans had grown 9.4 per cent at the end of the second quarter compared to the first quarter and by 26 per cent compared to the second quarter of 2018. Despite smaller growth in the loan book, corresponding revenue has increased 13 per cent, a double-digit increase compared to the first quarter and 41 per cent vs. the second quarter of 2018.

An increasingly better portfolio mix has helped bring non-performing loans (NPLs) to 5.4 per cent (under the Vietnam Accounting System standards), driven by improving credit quality. It demonstrates that the strategy of deepening existing customers’ share of wallet is yielding results, in terms of improving portfolio asset quality with known customers.

There are three main growth engines that have laid the foundation of FE CREDIT’s loan book growth in the quarter.

Firstly, cross-sell and Loans Top Up remain the largest contributors to FE CREDIT’s total loan book. Thanks to its investment in big data analytics, the resultant ability to analyze and identify potential customers for targeted offers has led to cross sell / top up growth of 10 per cent compared to the first quarter of 2019 and 44 per cent vs. the second quarter of 2018, with such loans constituting 54 per cent of the total portfolio.

Secondly, FE CREDIT’s new loan disbursements to new customers recorded growth of 9 per cent compared to the first quarter and 24 per cent vs. the second quarter of 2018, making it the second-largest contributor to the total loan book. This growth has been assisted by the fully automated lending platform $NAP, one of the most popular finance apps in Vietnam, which has garnered more than 1.4 million downloads.

Finally, as the standard of living is improving around Vietnam, the need for consumer durable loans and two-wheeler loans issued at the point-of-sale (POS) continues to grow steadily. FE CREDIT’s total loans at POS make up 9 per cent of the total loan book and grew nearly 10 per cent vs. the first quarter. It has captured the increase in market demand by boosting strategic partnerships with leading retailers who make up the bulk of the home appliances and two-wheeler sales in Vietnam.

Besides these three pillars of FE CREDIT’s loan book, credit cards also made a substantial contribution to the growth of ENR balances. Credit cards witnessed growth of 26 per cent in the second quarter compared to the first and over 102 per cent against the second quarter of 2018, with the total credit card base reaching over 1.7 million.

FE CREDIT’s credit card business is one of the fastest growing in Vietnam in terms of size and volume. It currently makes up over 40 per cent of total net receivables. Credit cards offer a more engaged relationship with customers, since it is used for everyday lifestyle spends, and this engagement is evidenced by the fact that card spending doubled in the second quarter compared to the second quarter of 2018.

In the first phase of its journey, FE CREDIT’s growth was largely driven by the expansion of its physical distribution. For the last two years, it has focused on digitization and gained tremendous success, which is evident in its business results.

In the next phase, FE CREDIT has a vision to be omnipresent across all consumer touch points with relevant offerings and an always-available revolving credit line. In order to deliver on this new vision, the company has tied up with many global leading fintech players and will enter into strategic partnerships to make credit available at customers’ fingertips, on their mobile phones.

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