Micro, small and medium enterprises (MSMEs) account for more than 98% of all businesses in Vietnam, nearly 70% of GDP, and 80% of employment, but low banking penetration rates mean many small businesses rely on informal loans.

Limited access to formal credit has a stark impact on the Vietnamese business sector. In 2020, 41% of Vietnamese businesses reported difficulty accessing credit. Meanwhile, nearly half of Vietnamese adults do not have access to bank credit, threating the future growth of the country¹.

A flourishing “black credit” sector has evolved over time to fill this gap, including many unlicensed providers who charge high rates of interest and use unscrupulous debt collection methods². Estimates suggest the black credit sector in Vietnam is valued at up to 30% of the formal credit provided by commercial banks, equivalent to about $50 billion per year³. Informal lenders often exploit social networks and popular messaging applications to market their products directly to consumers, evading scrutiny from regulators. Disproportionately, the black credit sector targets low income and financially illiterate people like farmers, ethnic minorities, factory workers and street vendors⁴.

Vietnamese business lending has also historically failed to support women entrepreneurs, who now account for 21% of business owners in the country⁵. 37% of women-owned MSMEs reported being able to access a bank loan in the past two years, compared to 47% of male business owners, representing a gender financing gap of $1.2 billion annually⁶. Even when women entrepreneurs do qualify for a bank loan, they tend to receive proportionately less credit than men. This gender financing gap further exacerbates existing barriers for women entrepreneurs in Vietnam.

HDBank is a listed top-tier Vietnamese commercial and retail bank serving 15 million customers, especially low-income consumers and MSMEs.

It operates 347 branches and transaction offices, over 23,000 points of sale, and employs more than 16,300 staff across the country. MSME customers comprises 49% of HDBank’s total loan book, with 50,000 individual MSME customers.

HDBank’s strong focus on MSME customers extends to low income rural communities. Agricultural lending represents 27% of their retail loan book, with these loans often used to support farming investment in better crops and animal husbandry methods. Key markets include areas that have traditionally faced financial exclusion, including the central highlands region (36%), South-Eastern region (35%) and Mekong (23%).

Retail consumers are served by the group’s subsidiary, HD Saison, the third largest consumer finance company in Vietnam. HD Saison primarily targets those earning less than US$180 a week, offering vehicle, cash, and consumer durable loans. HD Saison’s cash loans are frequently used by customers to accommodate economic and health shocks. These loan products provide an alternative to black credit, with flexible repayment options to help avoid the negative cycle of indebtedness.

Together, HDBank and HD Saison cover all 63 cities and provinces in Vietnam, with most of its new transaction points targeting customers in rural, remote and isolated areas who have limited access to modern banking and financial products. The bank’s strong digital focus is helping to reach these customers, providing access no matter where they live.

HDBank is exploring ways to offer further financial inclusion products, including health and life insurance policies, leveraging cross selling opportunities through its digital lending platforms. The bank is also pioneering green credit in Vietnam to support renewable energy projects, including financing an estimated $800m in climate finance projects by 2025, to reduce emissions by 54,000 tonnes of CO2 per year.