SCB X, the financial technology conglomerate and holding company of Siam Commercial Bank (SCB), is entering its third year of operations in 2025.
Despite economic headwinds, the company expects stronger profitability from its second-generation financial subsidiaries, said SCB X chief executive Arthid Nanthawithaya.
Steady Gains
SCB X has completed two full years of its transformational journey, classifying its business into three generations: traditional banking through SCB; financial services; and technology ventures.
Generation 2 subsidiaries -- including Card X, Auto X, Monix, and Abacus Digital -- have steadily expanded their consumer lending operations over the past two years, despite a sluggish economy and elevated household debt levels.
In 2024, Generation 2 businesses grew their customer base to 11.5 million, marking a 15% year-on-year increase. Outstanding loans rose to 185 billion baht, marking growth of 2.1%.
Mr Arthid attributed this performance to a selective growth strategy underpinned by strong risk management, as shared during SCB X's recent shareholder meeting.
Initially, SCB X aimed to tap into small-wallet customers via Generation 2 subsidiaries, seeking opportunities beyond traditional banking. However, due to ongoing economic fragility, the focus has shifted towards higher-quality customers with stronger repayment capabilities.
"With our refined strategy and robust risk management framework, Generation 2 businesses have sustained growth over the past two years. We expect improved profitability across these financial subsidiaries in 2025," said Mr Arthid.
New Growth Engines
One of SCB X's core missions is to develop new revenue streams, with virtual banking and regional expansion identified as key pillars for future growth.
The company has applied for a virtual bank licence from the Bank of Thailand, in partnership with KakaoBank, South Korea's largest digital bank, and WeBank, a global digital bank renowned for its advanced technology.
"SCB X intends to hold a majority stake of 80-90% in the proposed virtual bank. The Bank of Thailand and Finance Ministry are progressing on the licence issuance process, and we expect the winning lists to be announced over the next few months," Mr Arthid said.
As for potential new entrants, possibly including SCB X and other consortiums, their emergence is not expected to impact SCB's core business, said Mr Arthid, as the bank has already embraced artificial intelligence (AI) and is advancing its digital banking services in line with SCB X's "First AI Organisation" vision and SCB's "Digital Bank with a Human Touch" strategy.
In addition, Mr Arthid said SCB is in the process of acquiring 100% of Home Credit Vietnam, a major consumer finance provider. The acquisition has already been approved by the Bank of Thailand, and the next step is securing approval from the State Bank of Vietnam.
The company will initially focus on completing the Home Credit Vietnam acquisition before gradually exploring additional regional expansion opportunities, he said.
Raising Return on Equity
SCB X's strategic pursuit of new growth avenues aims to enhance its return on equity (ROE). The company is targeting a medium-term ROE of 12-13%, up from the current level of less than 10%.
"We look forward to improved profitability from our Generation 2 subsidiaries, which are showing a positive trend this year," said Mr Arthid.
