SBV approves Shinhan to acquire Prudential Vietnam Finance

The State Bank of Vietnam (SBV) has issued the decision on approving the purchase and sale of all paid-in capital Prudential Holborn Life Limited in Prudential Vietnam Finance Company Limited (PVFC) to Shinhan Card Co., Ltd

Shinhan Group has pursued the acquisition of PVFC since the beginning of 2018. Through its subsidiary, Shinhan Card, Korean conglomerate wanted to acquire a 100 per cent stake in PVFC for 161.4 billion won (roughly $150.8 million).

PVFC, a 100-per cent foreign-owned consumer finance company, has been operating in Vietnam since October 2007. In 2016, the company reported a revenue of 77.15 billion won (roughly $72 million) and a profit of of 13.15 billion won (roughly $12.27 million).

PVFC is one of four companies that dominate the consumer lending market in Vietnam, together with FE Credit, HomeCredit and HDSaison.

Vietnam’s consumer lending market has been booming in recent years. According to the World Bank, Vietnam has a young population with an economy on the rise. There are three million Vietnamese who joined the global middle class in the period of 2014 - 2016, with more than 900,000 people moving from rural to urban areas every year. These are all motivations to stimulate personal spending in Vietnam.

Vietnam is currently the second country with the highest share of consumer spending in GDP in ASEAN 5. Vietnamese people spend mainly on consumer goods such as automobiles, household appliances, smartphones, as well as leisure activities such as tourism.

In terms of the household credit curve, Vietnam lags far behind Thailand, where consumers are struggling to pay their debts. According to a survey of FT Confidential Research, a research service from the Financial Times, two-thirds of Vietnamese people spend 20 per cent or less than their disposable income to pay debts. Meanwhile, only four per cent of the population spends more than 50 per cent of their income to pay their debts.

However, the rapid expansion of the market for personal consumer loans has also caused corollaries. In 2018, many scandals related to this type of service slowed down the growth of the market, causing many financial companies to restructure their operations.