The outbreak of COVID-19 led to slower growth in consumer lending in Vietnam with consumers taking a more cautious approach to borrowing due to the uncertainty created by the pandemic. Nonetheless, consumer credit has continued to see double-digit growth in terms gross lending and outstanding balance with some consumers seeing card lending as a good way to manage their finances.
Banks are trying to balance the demand for consumer lending – especially consumer loans to buy, rent, and repair houses, as well as to buy cars and durable products – while also ensuring they are lending responsibly to avoid bad debtors. The Vietnamese government’s ongoing work to improve the consumer lending legal framework is helping the market to develop more robustly, reduce bad debt rates, protect legitimate interests and strengthen the liability of financial institutions.
While controlling the consumer lending purpose is difficult and potentially risky, according to the Vietnam State Bank, in recent years some financial lending institutions have recorded individual customers using consumer lending to purchase real estate with large amounts of money. This is potentially risky if the real estate market fluctuates or when consumer lending is used for a deposit, as real estate projects can be rejected for various reasons including the lack of a construction permit or no land certificate.
During 2021/2022, Buy Now Pay Later (BNPL) services have seen significant growth in the market and have become a more noticeable payment method in Vietnam. These services are appealing to consumers as they are not required to take out a credit card from a bank or financial institution and serve as a short-term solution to spread payments.
The potential for consumer lending in Vietnam still remains very high in suburban and rural areas as the perception towards lending is more open in these areas than in previous years due to the major changes in consumer habits and the demand for mortgages/housing from the middle income segment. In particular, consumers are increasingly prioritising lending from banks and other mainstream financial institutions to ensure security and to avoid usury.
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Understand the latest market trends and future growth opportunities for the Consumer Lending industry in Vietnam with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.See All of Our Definitions
This report originates from Passport, our Consumer Lending research and analysis database.
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