Hanoi, Vietnam, December 23, 2021—As Vietnam accelerates efforts to transition to low-carbon growth, IFC is providing a $70 million loan to Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank)—one of the country's leading banks in climate finance—to increase its funding for renewable energy projects in Vietnam.
With the loan, HDBank expects to expand its climate finance portfolio to more than $800 million by 2025, resulting in a reduction of over 54,000 tons of carbon dioxide emissions per year from 2021-2025 and thereafter.
"Going forward, HDBank sees climate finance as a driving force, especially with countries across the world trying to adapt and mitigate impacts of climate change while ensuring sustainable economic growth," said Pham Quoc Thanh, HDBank Chief Executive Officer. "IFC's long-term financing and expertise will help accelerate our evolving endeavors in climate business with a structured approach, allowing us to expand our climate portfolio by developing climate-targeted financial products and services that are aligned with global best practices."
As a signatory to the COP21 Paris Agreement, Vietnam aims to double its renewable energy generation capacity—excluding hydropower—over the next 10 years to meet the increasing demand for power driven by robust economic growth and a growing population. This will help keep the country on track to reduce its greenhouse-gas (GHG) emissions by at least nine percent by 2030 and further enable Vietnam to reach its recent COP26 commitment to net-zero carbon emissions by 2050. Currently, 50 percent of Vietnam's electricity comes from coal, making the need to develop a greener, lower-carbon economy—including necessary financing—crucial for the country to meet its reduced carbon emission commitments.
One of the top GHG emitters globally, Vietnam's overall climate-smart investment potential is estimated at $753 billion by 2030, of which up to $59 billion is in the renewable energy sector. However, the share of climate financing—as a percentage of total bank lending—in Vietnam was just about five percent or $10.3 billion as of 2016, indicating a significant climate finance gap.
"Building the capacity of private banks will help scale up climate finance markets, supporting climate change adaptation and resilience, and accelerate the shift to more sustainable lower-carbon economies," said Alfonso Garcia Mora, IFC Regional Vice President for Asia and the Pacific. "As Vietnam recovers from COVID-19, it's a historic chance for the country to prioritize climate-smart and sustainability-linked solutions with increased private sector participation. This will help Vietnam build back better, greener, and more sustainably."
Climate change is a strategic pillar of IFC's engagement in Vietnam. The aim is to catalyze finance and promote private sector solutions for climate action. IFC is supporting four Vietnamese commercial banks to expand their climate finance portfolios to $1.2 billion by 2025. As part of the World Bank Group Climate Change Action Plan 2021-2025, IFC and the World Bank are developing a new diagnostic tool—the Country Climate and Development Report (CCDR)—to help Vietnam align its climate action with broader development efforts. The tool will identify and prioritize opportunities for high-impact climate action to inform future World Bank Group climate engagements and investments over the next five years.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About HDBank
Ho Chi Minh City Development JSC Bank (HDBank), established in 1989 as a privately-owned commercial bank headquartered in Ho Chi Minh City, Vietnam, currently holds a market share of 2% in terms of assets and deposits among Vietnamese banks. As of 30 September 2021, the Bank reported total consolidated assets of VND346 trillion ($15.1 billion), conducting its operations in Vietnam through its 308 branches and around 18,025 point-of sale terminals nationwide. Since 2018, the bank's shares have been listed on the Ho Chi Minh City Stock Exchange (ticker: HDB) with the Vietnamese leading conglomerates Sovico Holdings being its largest shareholder representing 14.48% of its total share capital. HDBank has recently been supporting Vietnam's sustainability goals by pioneering as one of the country's largest green financiers.
