TOKYO -- Sumitomo Mitsui Financial Group announced on Wednesday it will acquire a 49% stake in Vietnam's biggest nonbank lender.
Sumitomo Mitsui will invest a maximum of 150 billion yen ($1.4 billion) in FE Credit as early as October.
The looming acquisition comes as Vietnam's consumer loan market rapidly expands on the back of strong and sustained economic growth. Sumitomo Mitsui is aiming to widen its business in Asia by leveraging its digitization and customer management expertise.
FE Credit, established in 2015 and based in Ho Chi Minh City, is an affiliated nonbank lender of VP Bank. Its business spans consumer loans, credit cards and motorbike loans.
FE Credit controls over 50% of Vietnam's consumer loan market.
Last year, FE Credit launched smartphone app-based banking services and began a deposit business. For the fiscal year ended December, it posted an operating profit of around $770 million and a net profit of around $128 million.
After regulatory screenings and as early as October, SMBC Consumer Finance, an affiliate of Sumitomo Mitsui Financial Group, will acquire a 49% stake in FE Credit from VP Bank. The maximum total investment will be around 150 billion yen, it making the biggest investment by a Japanese bank in a Vietnamese financial institution.
According to the World Bank, Vietnam's consumer loan market is expanding at an annual rate of over 30%. FE Credit's operating revenue, meanwhile, has grown at a double-digit pace every year.
Sumitomo Mitsui, which has also invested in financial institutions in Hong Kong, Indonesia and Cambodia, intends to leverage FE Credit's lending expertise to further expand its business in these territories.