Although positive growth was recorded in consumer credit in 2020, including in both outstanding balance and gross lending terms, the strong double-digit growth rates that were seen in the category during the year were in fact considerably slower than what was seen earlier in the review period. While demand for consumer credit continue to increase from a low base, the economic uncertainty that has emerged in the wake of the COVID-19 pandemic discouraged many Vietnamese consumers and small businesses from taking out credit.
Another trend supporting growth in consumer credit gross lending during 2020 despite the negative effect of the COVID-19 pandemic was the increasing demand for micro-finance, specifically the personal loans of up to VND100 million. These types of loans have become most popular among young people and although the purpose of financing varies from borrower to borrower, these types of loans are often used as seed capital for small businesses that operate primarily online.
With the economic environment in Vietnam rather hostile throughout 2020 due to the impact of the COVID-19 pandemic, the government requested that all of the country’s banks and financial institutions offer lower interest rates to their current consumer borrowers as well as to new borrowers. The new suggested rate was set at 2-3% per annum.
The forecast period is expected to see consumer credit outstanding balance register strong growth. One of the main factors underpinning this positive performance is expected to be the debt relief measures that were introduced to the Vietnamese government in response to the COVID-19 pandemic during 2020.
Consumer credit in Vietnam is expected to continue registering strong growth in both outstanding balance and gross lending terms over the forecast period. The Vietnamese consumer lending industry is less mature than in many other countries and for this reason outstanding balance is rising from a relatively low base.
The forecast period is expected to see consumer credit benefit from the strong development that is set to be seen in fintech in Vietnam. In particular, mobile payment apps are likely to emerge strongly.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Vietnam with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Consumer Credit research and analysis database.
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