F88 in 2023: shows signs of growth despite facing difficulties

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The year 2023 will witness a global economic downturn, directly affecting the financial sector in Vietnam. Strong market fluctuations along with tightened credit policies have created a challenging context for businesses operating in the financial industry in general. Despite common difficulties, F88 Business Joint Stock Company (F88) still maintains its resilience, ensuring good liquidity along with a clear direction for future development goals.

2023 financial results

In 2023, F88 will still maintain its advantage in the Transaction Office network with 814 Transaction Offices in 63 provinces and cities, helping to increase revenue. 12% compared to 2022. Customer scale also increases accordingly 43%; Loan balance in the last 6 months of the year increased 41% compared to the beginning of the year. However, because the company proactively applied a strategy of focusing on quality loans, the total loan portfolio in 2023 decreased. 10% compared to the end of 2022.

Since the fourth quarter of 2023, F88’s profits have recovered, due to upgrading risk management strategies to help reduce risk. 26% risk cost in the second half compared to the first half; improved cost-to-income ratio (CIR) of 12%; improving the bad debt ratio (NPL) in the second half of the year, specifically increasing the debt recovery value in the second half of the year by 4 times compared to the first half of the year.

F88’s pre-provision operating profit (PPOP) increased 2.1 times compared to 2022. However, for the whole year 2023, the loss after tax was recorded at VND 528.8 billion. The main reason comes from F88’s cautious provisioning policy. Notably, F88 maintains a collateralized lending model with a strict write-off policy for 100% of overdue debts exceeding 90 days. Although F88’s write-off policy is quite strict, due to the good quality of pledged assets, recovery after write-off is still guaranteed. Positive impacts were recorded through a 22.4% reduction in write-off costs and a 460% improvement in debt collection value in the second half of 2023 compared to the first half of the year. The total value of debt recovered after a successful write-off in 2023 is 2.4 times higher than in 2022.

F88 in 2023: shows signs of growth despite facing difficulties
F88 logo

Outstanding marks in 2023

Ensuring liquidity is the first positive mark. In 2023, F88 continues to implement its capital diversification strategy. Significant successes such as mobilizing 50 million USD in equity from Vietnam Oman Investment and Mekong Capital, borrowing an additional 50 million USD from Lending Ark or issuing more than 250 billion VND of private bonds in the third quarter of the year. 2023. More importantly, F88 has paid 100% of its debt obligations on time, including 1,470.9 billion VND in bonds and 49 million USD for foreign loans. This makes an important contribution to helping F88’s financial leverage ratio D/E (debt/equity ratio) stay at 1.8 times as of December 31, 2023, much lower than the The average of the consumer finance industry that FiinRatings statistics is at 4.58 times.

Improving risk management efficiency and asset quality is the next milestone. Some impressive activities include: Applying a strict credit appraisal process from loan application submission to disbursement and post-disbursement supervision. Price the product, here understood as the loan, by assessing the risk profile of the borrower. Building a credit loss provision model (Expected Credit Loss – ECL) in accordance with IFRS 9 standards with consulting and verification by Ernst and Young and expected to officially apply from 2024. Streamline the process asset management as well as improving the team’s capacity to ensure legal compliance and minimize individual violations in debt collection activities.

Promoting social impact initiatives and promoting financial inclusion are activities that bring value to the community. In 2023, F88 was chosen by Australian Development Investments (ADI) – the Australian Government’s non-profit organization on gender equality as a partner to implement activities to promote gender equality. Two specific action programs are training and giving promotion opportunities to female employees in the company and implementing preferential loan packages for female start-up customers.

Overall effective operations and improvement efforts in 2023 have been the premise for FiinRatings to continue maintaining F88’s credit rating at BBB-.

Development goals for 2024

Based on the above recovery momentum, F88 targets specific goals such as: Expanding its loan portfolio and bringing total revenue growth to double-digits. Growth targets in 2024 will be accompanied by a continued focus on improving loan portfolio quality; Optimize the capacity of the transaction network in parallel with opening at least 80 additional transaction offices in areas with good classification A and B+; Launching new product lines to increase revenue, expand markets, and implement social commitments, the highlight of which may be implementing new insurance business methods; Expand customer base by 30%, improve service quality, improve overall loan portfolio quality with a commitment to increase customer satisfaction score (CSAT) to 93%; Strengthening risk management activities helps reduce bad debt and successfully implement risk-based lending product policies. Optimize costs with the specific goal of reducing the Cost to Income ratio (CIR) by 4% compared to 2023.

F88 in 2023: shows signs of growth despite facing difficulties
Transaction office of F88 Business Joint Stock Company

In 2024, F88 continues to implement gender equality and community support initiatives, and we also establish a dedicated ESG unit to build an action framework that approaches advanced practices. Actively expand partner network, grow profits and consolidate F88’s leading position in the mortgage lending market in Vietnam, while focusing on the company’s safe and sustainable growth in the future. long-term.

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