Promoting sustainability through green credit

Over the past 25 years, Bac A Bank’s development orientation has been to focus on providing investment consultancy to customers who apply high technology in agricultural and rural development, healthcare, education, and supporting industries for agriculture, contributing to the creation of a green and safe eco-system.

Two of the bank’s five core values are related to this. The first value is taking the lead in applying high technology to agricultural and rural development in order to contribute to improving businesses’ production and competitiveness in light of the current trend of globalisation. The second core value is the cornerstone to the bank’s reliability and environmental strategy, centring on ensuring product quality and customer-oriented services. All projects receiving investment consultancy from Bac A Bank attach special importance to the environmental dimension of their performance.

A large boost to green projects

The bank has laid out methodical and professional procedures for the deployment of its green credit policies. First, it formulates a portfolio of sustainable projects which can have positive impacts on the environment in order to provide investment consultancy and credit. Such projects can go from hi-tech agri-businesses, agricultural co-operatives, and individual farmers who produce vegetables and fruit. Then it appraises all impacts that the projects would have on the natural environment and social welfare while deciding whether to provide investment consultancy and credit to them. Finally, Bac A Bank frequently reassesses the effectiveness of project implementation with a special view to the environment, and supplements and perfects its product packages to improve the efficiency of its green credit.

With this green strategy, Bac A Bank provides investment consultancy for five major groups of environmentally friendly projects. These projects are about raising dairy cows and processing concentrated fresh milk; preserving and producing clean medicinal herbs and natural flavouring; planting and exporting high-quality vegetables and rice; wood processing and sustainable afforestation; and the production of pure mineral water and fruit juice.

For example, one of the most outstanding projects that have received investment consultancy from Bac A Bank is a $1.2 billion project in the central province of Nghe An that features a state-of-the-art dairy cow farm and fresh milk production plant. This project currently has more than 45,000 dairy cows and a capacity of 500,000 tonnes of fresh milk a year and provides over 50 per cent of domestic fresh milk materials now.

Also at present, Bac A Bank is providing investment consultancy for a $2.7 billion hi-tech concentrated dairy and fresh milk production project in Russia as well as a project to produce and export vegetables and flowers, with the application of state-of-the-art technologies in all production stages. This project is implemented in three localities including Nghe An, the Central Highlands city of Dalat, and the northern province of Thai Binh.

Moreover, Bac A Bank has also been providing investment consultancy to many sustainable projects, such as a plant with wood processing and forest development in Nghe An, the Nui Tien plant to produce pure natural water, herbal water, and fruit juice, and the NASU sugar and sugarcane projects.

All these projects have demonstrated the bank’s tireless efforts in providing green credit for agricultural and rural development, and the bank’s strong commitment to sustainable development.

Impressive business results

Over the past 25 years, Bac A Bank has significantly improved the quality of its assets, as well as its safety and efficiency indices. Specifically, the scale of outstanding loans has continued growing at a high level, with the quality ensured at every turn, reaching the impressive VND69.234 trillion (over $3 billion) as of June 30, 2019, up 7.49 times compared to 10 years ago, and up 1,603 times compared to the end of 1995.

Under the bank’s rules to prioritise providing credit to sectors and professions that have or are working to achieve sustainable development, the bank’s credit structure has undergone a transformation since 2009. Specifically, the agricultural, rural, healthcare, and education sectors have been continuously increasing their proportion of the bank’s loans. Since 2013, the ratio has accounted for more than 50 per cent of Bac A Bank’s total loans.

As of June 30, 2019, the ratio of loans for these sectors was 57.11 per cent, and the bank’s bad debts were an infinitesimal 0.72 per cent. Between January 1 and June 30, the total number of projects and schemes receiving green credit was 284, and the number of customers obtaining green credit from the bank was 286. Bac A Bank had VND20.577 trillion ($894.65 million) in outlying green credit, making up 30 per cent of total debts.

In addition, the bank’s total investment value reached $20.247 trillion ($880.3 million), equivalent to 19.83 per cent of its total asset value. To improve the efficiency of its investments, Bac A Bank has also been reviewing its entire investment portfolio, as well as improved all safety indexes under the new standards set out by the State Bank of Vietnam.