FE CREDIT reported 2nd quarter and 1H 2020 result

On 5th August 2020, FE CREDIT, together with VPBank, organized an analyst call to discuss its 2nd quarter results as well as its H1 financial achievements.

As of end of Jun 2020, the company reported ENR was VND60.2 trillion, a modest 3.3% increase compared to same period last year. However, 1H 2020 PBT is up by 13% compared to same period last year, reached VND2.4 trillion, Q2 PBT contributed VND1.5 trillion to the sum. This result is possible due to the company’s ability to optimize cost resulting in better CIR, increase on collection efficiency and enhance risk mitigation tools during the first half of 2020. NPL is unchanged from 1H 2019 showed a firm control on risk. The results, therefore, exceeded management’s expectations at the beginning of this year.

Firm hand on Cost and Funding

During 1H.2020, FE Credit has been optimizing cost via the speeding up of technology implementations such as E-signature and AI in tele-sales. The application of e-KYC is being adapted by the company to sales approval process as well. These efforts are part of the digitalization endeavours that the company has been driving in past years and it certainly proved its effectiveness during needed time.

At the same time, management has been able to maintain a healthy funding despite the tough environment. CAR remained above banking requirement, at 22% and funding source were well diversified and ample, evidenced in the lower COF reported for Q2 2020. These efforts were recognized by Moody’s in its assessment note confirming Stable outlook for FE Credit.

A shift in portfolio mix

Even before onset of COVID-19 pandemic, the company has actively made a shift in its portfolio mix to target more on existing customers and away from new, more risky ones. This action both addresses the urgent needs when time called for a better risk portfolio as well as to achieve the target stated in Circular 18 by 2019 issued by SBV. As a result, the company saw improvements in asset quality this quarter with reduced roll over rate.

Credit card continues as a growth engine with growth of 30% in ENR compared to same time last year. During social distancing, we saw a surge in credit card usage, especially for grocery and online shopping. Total customers with active credit card was reported at 24% at end of June 2020, up 5% from June 2019 figure.

Moody’s confirmed Stable long-term outlook for FE Credit

Another piece of good news is that on 22 July 2020, Moody’s confirmed long term rating assessment for FE CREDIT as Stable at B1. This reiterated stable outlook concludes Moody’s review for downgrade initiated on 07 April 2020 of 5 financial institutions. The announcement certainly came as a solid confirmation for the management’s effort throughout 1H 2020.

Moody’s recognized that the company was able to mitigate the solvency and liquidity risks that the agency was originally concerned about; with successful efforts in stabilizing financing conditions, proved by ample liquidity from both foreign and domestic sources. The company also proved its capability in managing credit and liquidity risks as well as possible disruptions during the virus outbreak. The result is a lower COF during the last 6 months. In conclusion, the rating agency noted that FE Credit has shown prudent risk management, such as tightening underwriting criteria against the backdrop of slowing economic growth. This confirmation certainly serves as icing on the cake for company after all its hard work.

Supporting our customers through hard times

In light of COVID-19 and its after-effect, FE Credit has launched since March 2020 programs to support genuinely distressed customers by offering to restructure their loans and defer loan payments as well as waive late payment penalties. As of date, FE Credit has successfully offered assistance to over 182,000 customers, about 5% of our active customers with total loan eligible of VND4 trillion. The program in continuation is our commitment to support the community in need.

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