Vincom Shopping Centre in Ha Noi. Viet Nam's consumer loans hit a five-year record high of US$15.12 billion last year. — VNS Photo Truong Vi

The amount, which was up 44 per cent against 2014, accounted for 10.4 per cent of the country's GDP and 6.8 per cent of the economy's total outstanding loans, the report said.

StoxPlus attributed the boom to a significant change in Vietnamese borrowing behaviour and the high demand for housing loans from middle-income earners. The Vietnamese have been turning to finance companies instead of relying on their relatives, friends or the informal finance market to lend them money for spending on goods and services.

In addition, as a result of the VND30 trillion preferential lending package from the commercial banks for housing loans, consumer finance companies have tried to increase sales in this segment by offering lower interest rates, resulting in a growth in the consumer loans market.

As Viet Nam's consumer finance market grows strongly, it has also become more competitive with the participation of more players.

According to the report, the market last year witnessed the acquisition of many local finance companies by joint stock commercial banks and the fast growth of local consumer finance companies, such as FE Credit.

However, according to the report, it is predicted the market will be gradually dominated by local companies, with VP Bank Finance Company taking the top spot from Home Credit in terms of outstanding loans, accounting for more than 50 per cent of the total market share of consumer finance companies.

As the number of players doubled this year, while the number of Points of Sale (POS) is limited, the bargaining power of buyers will be high, the report said, adding that incentives or commission would be raised in order to secure a POS slot.

"Take Mobile World and FPT Shop for example, there are at least four consumer finance companies — FE Credit, Home Credit, HD Saison and ACS — located in one shop. Therefore, profit margin of these companies will unquestionably reduce."

Besides this, the sales channels of consumer finance companies also suffered from the challenges of higher sales and the operation expenses from collection and payment to third party companies, such as MoMo and Payoo. In particular, these third party companies charged a fee of 5-8 per cent per collection or payment transaction, which also led to a reduction in the profit of consumer finance companies. — VNS