Fiinatings raises F88's credit rating outlook to "advantage"

Raising the credit rating outlook can help F88 reach more lending partners and improve average capital mobilization costs.

FiinRatings' decision to increase outlook this time reflects a significant improvement in business operations, capital, liquidity and risk management capabilities of F88.

We assess that F88s capital and liquidity have improved significantly compared to the previous credit rating period, thanks to the companys success in continuing to diversify capital mobilization sources from domestic and foreign partners, FiinRatings announcement clearly explained.

At the same time, FiinRatings emphasizes the diversity of mobilized sources, bringing a stable capital foundation for business operations and ensuring solid liquidity.

In addition, FiinRatings said that the advantage of F88's leading position in the alternative lending industry, with a target of 1,000 stores by 2026, is also an important factor that helps the organization improve F88's credit rating prospects.

Specifically, in 2024, F88 recorded a lending balance growth of up to 22.7%, much higher than the average growth rate of the consumer finance industry of 3.84%.

F88 also diversified its revenue sources, in which insurance revenue increased by 11.8%, contributing 9.5% of total revenue.

The Debt/Everyone ratio remains at 1.7 times, 4.6 times lower than the trungential level of consumer finance companies, demonstrating the balance between safe and effective capital use.

In the liquidity endurance test, FiinRatings has hypothetically mobilized loans with a reduction of 50% and no increase in charter capital in 2026, the result of F88 is still maintaining stable liquidity and ensuring compliance with obligations to related parties.

In terms of profitability, F88 achieved a profit of VND 351.5 billion, along with a sharp decrease in operating expenses (CIR). Important financial indicators such as NIM, ROE and ROA have all improved significantly, outperforming 2023 and above the industry average. This helps strengthen investors' confidence in F88's business operations.

According to our forecast, F88 will continue to record high after-tax profits of VND500-700 billion in the 2025-2026 period thanks to its lending expansion strategy and cost-effective management, FiinRatings stated in the announcement.

To achieve the above high operational efficiency, F88 has maintained a strict risk management policy that the credit rating agency commented as "significantly improved in the ability to manage and handle bad debts".

FiinRatings' announcement added that F88 has maintained stable asset quality, thanks to strong improvements in customers' debt repayment capacity, as well as from governance, tightening risk appetite in business and effective coordination between departments.

The debt collection rate also recovered significantly, reaching 41.7% compared to 15.6% in 2023. This helps strengthen investors' confidence in F88's business operations.

We expect F88 to continue to improve debt collection and credit loss as well as continue to maintain caution in policies for classifying, setting off and handling bad debts. As a result, the average cost of outstanding loans could fall to 19% by 2026, FiinRatings wrote.