Vietnam’s economy is characterised by stable growth rates. The local banking sector, however, is still poorly developed.

This opens up growth opportunities for An Binh Commercial Joint Stock Bank (AB Bank), a bank headquartered in Ho-Chi-Minh-City and specialised in financing small and medium-sized enterprises. DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, provides AB Bank with long-term financing worth USD 20m.

DEG’s loan is part of a USD 150m financing package, arranged by the International Finance Corporation (IFC), a member of the World Bank Group. Other investors include the Norwegian development finance institution Norfund. Up to 70 per cent of the funding will be earmarked for refinancing loans to small and medium-sized enterprises (SME), of which at least a third are women-owned SMEs.

“Our investment will help a medium-sized Vietnamese commercial bank to further expand its lending to small and medium-sized enterprises. At the same time we promote female entrepreneurs in Vietnam in order to contribute to increased economic participation of women,”

said Petra Kotte, Head of division Financial Institutions and German Business at DEG.

AB Bank has experienced dynamic growth since its foundation in 1993. The bank’s network nowadays comprises 165 branches throughout the country. It serves more than 600,000 retail and SME clients and 24,000 corporate clients. AB Bank is planning to further expand its branch network in the next years and to become one of the leading banks in the MSME segment. The long-term refinancing by DEG and its partners will allow the bank to supply more capital, which in turn helps its clients create and secure additional jobs.

AB Bank currently employs a staff of 3.624. The number of employees will increase significantly over the next five years by creating additional qualified and well-paid jobs. What is more, the bank generates local income, including wages and salaries, interest expenses and income taxes.

DEG provides AB Bank with long-term capital, which at present is only available to a limited extent in Vietnam. DEG’s current portfolio in the country amounts to around EUR 85m, including financing for companies operating in manufacturing and agribusiness.