Consumer finance major F88’s credit rating upgraded on improved funding capability, liquidity

Vietnamese credit ratings agency FiinRatings has upgraded F88's credit rating from “BBB-” to “BBB”, with a “stable” outlook, citing the company's enhanced capital-raising ability and improved liquidity position.

According to FiinRatings, F88’s funding and liquidity capacity have shown significant improvement compared to previous assessments, supported by effective diversification of funding sources - including private and public bond issuances, and partnerships with international funds and domestic financial institutions.

The company’s average cost of capital fell to 14.7% in the first half of 2025 (from 15.6% in 2024), thanks to more favorable borrowing rates and a sharp decline in hedging costs to 0.8% (from the previous 2-3%).

The upgraded rating also reflects F88’s continued leadership in Vietnam’s alternative lending sector, along with solid profitability and asset quality.

In the first nine months of 2025, F88’s pre-tax profit doubled year-on-year to VND603 billion ($22.9 million), equivalent to 90% of the year's target (VND673 billion).

The company’s return on equity (ROE) surged to 43% in Q3/2025 from 28.3% a year earlier, while EPS reached VND77,704 ($2.95) per share, implying a P/E ratio of about 13 times.

F88 has expanded its network to 896 outlets nationwide, strengthened cooperation with many strategic partners, and invested heavily in technology to enhance customer access and conversion from offline to online channels, thereby broadening its market coverage.

Unlike banks, which can raise capital from customer deposits, F88’s primary funding sources are equity and debt - including loans from international institutions, domestic financial organizations, and bond issuances.

Debt typically accounts for 60-65% of total capital, while equity represents 35-40%, resulting in a debt-to-equity ratio ranging between 1.53x and 1.68x, depending on the period.

In the first nine months of 2025, F88 achieved a significant milestone by securing a $30 million loan with a 2-3 year tenor from Lendable. This is the largest loan ever granted by the London-based financial institution to a Vietnamese finance company, bringing F88’s total funding from Lendable to nearly $70 million.

Previously, F88 had raised thousands of billions of dong (VND1,000 billion = $37.97 million) from international organizations, with total outstanding loans reaching VND2,487 billion ($94.43 million) as of end-September 2025, primarily from Puma Asia, Lendable, Indo-Pacific Liquidity Facility, and Lion Asia.

In terms of bond issuance, F88 has also built a strong reputation, completing seven private placement bond issuances since early 2025, with a total value of VND700 billion ($26.58 milllion).

As a result, the company’s total borrowings - including loans from financial institutions and bond proceeds - increased 19% year-to-date to VND3,448 billion ($130.92 million).

FiinRatings also highlighted F88’s plan to issue public bonds in 2026, noting that this marks a significant step forward for the company. Public bond issuance requires stricter compliance and transparency, designed to protect investors’ interests.

Meeting these higher standards reflects a company’s financial strength and robust governance, while also enabling greater access to capital markets, higher bond liquidity, and enhanced corporate credibility.

These factors collectively help F88 maintain a stable capital base to support operations and ensure strong liquidity fundamentals. FiinRatings noted that F88 effectively manages its capital structure by using long-term funds for short-term lending, optimizing capital efficiency while ensuring liquidity safety.

The company also maintains a liquidity buffer equivalent to 2% of total assets from the prior year to mitigate market fluctuations and strengthen risk governance.

According to F88’s financial statements, its loan portfolio expanded 40% year-to-date to VND6,413 billion ($243.46 million), supported by revenue diversification into insurance distribution and financial services.

The credit rating upgrade underscores F88’s commitment to transparency, operational efficiency, and credibility.

Given the capital-intensive nature of its business, maintaining investor confidence and access to funding is crucial - and this higher credit rating provides a strong foundation for F88 to continue raising capital through bond markets while lowering its cost of funds over time.