The five-year financing package is likely to improve the Vietnamese banking sector’s competitiveness by promoting a cashless economy via innovation and competition.

It is expected to create between 35,000 and 56,000 jobs over the next five years.

A lack of financial access is one of the key challenges for MSMEs, which employ about 77% of Vietnam’s labour force and contribute to around 41% of the country’s GDP.

According to the IFC - the financial arm of the World Bank (WB) - about 70% of MSMEs have financing needs, resulting in a US$23.6 billion gap, equivalent to 12% of GDP.

The IFC’s long-term funding commitment will enable TPBank to double its MSME portfolio over the next five years, providing more than US$1.8 billion in about 46,000 loans by 2022. Notably, up to 65% of the transactions will be made digitally.

The much-needed syndicated funding from the IFC and international lenders will help TPBank to implement a long-term digital strategy to capture the digital demographic growth opportunity and increase its reach to the unbanked and under-served segment, said TPBank CEO Nguyen Hung.

The syndicated facility is expected to have a catalytic impact for the Vietnamese banking sector, which is at a key juncture of mobilising long-term private funding needed to support the country’s key development goals of developing SMEs and creating jobs, said Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia and Laos.

The IFC-TPBank partnership started in early 2016 and has expanded over the years, allowing the bank to help more local companies increase trade, generate revenues and create employment opportunities.