ADB provides US$300m loan to BIDV to support SMEs in Vietnam

ADB and BIDV signed a US$300 million loan agreement to support SMEs in Vietnam. - VNS Photo

“The agreement includes a $200 million loan provided by ADB and a $100 million loan arranged by ADB from 12 commercial lenders,” BIDV Chairman Phan Duc Tu said at the signing ceremony. “This is the biggest commercial loan ADB has provided to an Asian commercial bank so far, affirming the development finance institution’s positive evaluation of Vietnam’s stability and economic growth as well as its trust in Vietnam’s banking operations in general and BIDV in particular.”

He said the loan would support SMEs in Vietnam and reaffirm their partnership with ADB in achieving poverty reduction, economic growth, regional integration and environmental protection. The loan symbolised the long-term co-operation between ADB and BIDV for sustainable development in Vietnam.

“ADB’s partnership with BIDV, the largest lender to the country’s SME sector, will boost lending to businesses, which often find it challenging to gain access to financing,” said Director General of ADB’s Private Sector Operations Department Michael Barrow.

“BIDV’s effort to make SME lending a key strategic priority is aligned with ongoing endeavors by ADB and the Government of Vietnam to improve access to finance for SMEs, thereby contributing to inclusive economic growth,” he said. “The loan demonstrates ADB’s ability to catalyse long-term lending from commercial institutions to channel investments for development impact. Twelve commercial lenders from different countries have joined with ADB to provide the long-term lending facility.”

Nguyen Thi Hong, Deputy Governor of the State Bank of Vietnam, congratulated the groups on their success and called for new, deeper co-operative opportunities for ADB, BIDV and commercial banks.

SMEs account for most of Vietnam’s businesses, contributing around half of all employment and 40 per cent of gross domestic product. Despite their significant contribution to the economy, SMEs still encounter numerous obstacles that inhibit their economic potential, including a lack of access to finance needed to expand.

In recent years, BIDV has increasingly served the SME segment with positive results. As of 30 June, 2018, BIDV had 250,000 SME customers, accounting for 40 per cent of all SME customers in Vietnam. Its SME lending portfolio reached over VND240 trillion (approximately $10.4 billion), giving it the largest share of SME lending among the country’s banks.

The loan will make ADB the first development finance institution to provide long-term commercial lending to BIDV. ADB will work with BIDV to maximise the positive social and environmental impacts of the assistance by implementing an environmental and social management system. Digital finance will be promoted through the introduction of new digital products to reach financially underserved populations in rural areas, including SMEs owned by women.