How risk management contributes to Home Credit’s strong performance

Risk management is one of the most important aspects of Home Credit’s operations. Automatic decisions are made based on highly sophisticated scorecards and credit assessment processes, constantly increasing the usage and effectiveness of big data.

Annica Witschard, CEO of Home Credit Vietnam, makes a presentation to investors. Photo by Home Credit

“Advanced predictive models are applied widely in Home Credit to mitigate risks, including advanced machine learning approach and gradient boosting techniques leading to scorecards, advanced anti-fraud operations based on biometrics, sophisticated early warning system and active fraud score model, and highly ethical and effective collection practices,” Fabien Sanchez, the company’s chief risk officer, said.

Besides, a robust collection strategy is employed methodically, ethically and professionally by Home Credit’s employees.

Its advanced collections strategies are supported by high technology such as well-trained internal call centers and up-to-date voice technology.

Home Credit Vietnam’s leadership. Photo by Home Credit

Home App is the center point of the customer journey, both a central platform to onboard and an all-in-one digital financing solution.

For daily usage, in-app content includes financial literacy, self-service features, new partner integration, gamification, and a reward program.

The app expands cross-selling and prioritizes sales-related features. This enhances customer engagement and experience.

“Home Credit has a high ranking among consumer finance apps with 8.3 million registered users and 1.3 million monthly active users,” CEO Annica Witschard revealed.

In 2022 the company’s sales volume grew by 20% driven by a strong consumer durables rebound after Covid, two-wheeler recovery, increased market share, double-digit growth in revolving balances contributed by Home Pay Later and credit card usage, and spending.

Home Credit Vietnam’s CEO, CFO and CRO in a Q&A session with investors. Photo by Home Credit

Chief finance officer Pham Ngoc Khang said Home Credit has strong liquidity, strong capability to mobilize funding and supporting asset generation.

Referring to funding results last year, he said: “Home Credit raised more funds amid a challenging market in Q4/2022. Its funding channels included offshore loans, valuable paper issuance and onshore loans.

Liquidity and asset liability management developed robustly. It had a high liquid asset/total asset ratio of 24% as of December 22, 2022, a base to support peak sales season, while capital adequacy ratio was better than regulatory requirements and provided a solid capital buffer to face the volatile situation.

“The sustainable overall results in 2022 were driven by strong asset generation, resilient net interest margin and ongoing access to liquidity, continuous inherent operational efficiency, and stable risk performance underwriting,” Khang said.

“Home Credit Vietnam expects to grow its asset base driven by sustainable asset generation in its core business and omni-channel distribution strategy to maximize cost efficiency.

“Robust profitability is supported by solid asset generation, inherent operating efficiencies, diversified funding and strong equity.”