Siam Commercial Bank (SCB) aims to increase return on equity (ROE) to 20% in five years as part of the bank's ongoing restructuring.
The reworking of SCB Financial Group under new parent SCB X is focused on new growth businesses, including digital assets. They are expected to generate a better ROE for the group for the next five years.
The new S-curve growth businesses, its digital lending platforms Monix and SCB Abacus, are expected to generate better ROE in the long term, around 20% each, than traditional businesses, said SCB chief financial officer Manop Sangiambut.
These traditional services contribute an 8% ROE now, he said.
The bank is awaiting final approval from regulators for a share swap between SCB and SCB X.
The entire process, including a delisting of SCB from the Stock Exchange of Thailand and replacement with an SCB X listing, is expected to be completed by the first half of 2022.
The business restructuring calls for SCB to transfer existing new growth businesses to SCB X, while traditional banking businesses are operated under SCB.
Credit card and auto loan businesses, namely Card X and Auto X, respectively, are scheduled to be transferred to SCB X, said Mr Manop.
He said another digital loan platform, AISCB, a joint venture between SCB and the country's largest mobile operator Advanced Info Service (AIS), is expected to generate a good return.
Robinhood, a food delivery platform under SCB, also plans to expand to a digital lending platform in the future after its recent foray into the online travel agent service, said Mr Manop.
He said the bank would pay more attention to fee-based income businesses next year rather than loan growth to strengthen non-interest income.
In particular, wealth management, insurance and financial asset investment would be the key areas generating fee-based income next year after income from these segments has been rising the past few years, said Mr Manop.
The bank's non-interest income ratio traditionally represents more than 35% of SCB's total revenue, he said.
SCB 10X, a tech and venture capital subsidiary, also contributed positive fee-based income for the bank, with the company's revenue expected to continue increasing next year, said Mr Manop.
SCB X expects key income contributions from the bank's traditional businesses for the next two years. After that period, the new growth businesses will begin to generate income and gradually increase SCB X's ROE, he said.
SCB, the country's fourth largest lender by total assets, has yet to finalise 2022 financial targets.