Representatives of the pawnbroker and loan company cited the high cost of risk as the main reason for the loss.
The cost of risk refers to the cost of losses associated with risk and risk management. The total of this cost is the sum of all aspects of a company’s risk-related functions.
According to F88, a recent debt collection inspection conducted on companies in the financial sector, including the company itself, influenced the tendency of customers to repay their debts. This has forced companies to tighten their risk appetite, which is the level of risk an organization is willing to take to achieve the goals it deems valuable.
At the same time, the results of the investigations limited F88’s ability to open new offices.
In the past, police inspected a number of F88 branches across the country, including those in HCMC, Binh Duong and Can Tho, after detecting several violations. The violations included poor data management and insufficient business activity reporting.
In HCMC alone, investigations have been opened against 10 people who are either managers or employees of the company.
Founded in 2013, F88 claims to be the fastest growing financial services provider in Vietnam. It has 830 branches throughout the country. After the latest investigation, the company said it had developed processes, regulations and sanctions in debt collection activities, ensuring that it would comply with the law and not cover people who break the rules.
F88 recorded continuous profits during the 2019-2021 period, with the average annual figure hovering around tens or hundreds of billions of dong (10 billion VND equivalent to 415,000 US dollars).
Last year, after-tax profits peaked at more than VND200 billion.
Its business results in the first half of this year are quite similar to those of other financial institutions.
During this period, many financial companies reported a decline in profits or even heavy losses ranging from hundreds of billions to trillions of dong as their customers face financial difficulties and cannot pay their debts. debts.
The company plans to issue more private bonds in the last six months.
In March, F88 received investment funds of $50 million from two investors: Vietnam-Oman Fund and Mekong Enterprise Fund IV.