SCB opts to scale down operations

Bangkok Post

6 days ago

Siam Commercial Bank (SCB) plans to scale down its business operations over the next 12–18 months in response to a weaker outlook for the Thai economy.
SCB chief executive Kris Chantanotoke said the bank expects both the Thai economy and business sector to face increased challenges during this period.
Key headwinds include US-imposed tariffs and the persistently high level of household debt, both of which are expected to dampen Thailand's economic growth, he said.
"The uncertainty surrounding US tariffs on Thai exports is likely to impact export performance in the second half of the year. Thailand's direct exports to the US account for a significant portion -- around 20% -- of the country's total export value, reflecting its long-standing reliance on the US market," he said.
According to Mr Kris, if Thailand faces tariffs 10% higher than other regional peers, the country's economy could be significantly affected, undermining its competitiveness.
For 2025, SCB forecasts GDP growth at around 1.5%, with the pace expected to slow to around 1% in the second half of the year, raising concerns of a potential technical recession.
Additionally, the country's persistent household debt burden will continue to weigh on economic expansion and limit loan growth within the banking sector.
"In light of these headwinds, SCB will adopt a more cautious approach to its business operations over the next 12–18 months," Mr Kris said.
As part of this strategy, the bank will accelerate its digital banking efforts and remains committed to its goal of generating 25% of total revenue from digital banking by 2025. If it meets this year's target, SCB will set higher digital income goals for the coming years to help control operational costs.
SCB is also aiming to reduce its cost-to-income ratio, which dropped to 36.8% in the first quarter of this year.
Mr Kris noted that an increased focus on digital banking will continue to reduce the need for physical branches, aligning with the overall decline in in-person transactions.
He said the increased focus on digital banking would lead to a further reduction in the number of physical branches, in line with the decline in business transactions. SCB has already scaled down its branch network to around 800 outlets, reflecting the shift away from traditional banking channels.
Ultimately, Mr Kris said the number of remaining brick-and-mortar branches will depend on the adoption rate of digital banking, although physical branches will still play a necessary role for SCB.
According to Mr Kris, the bank will also prioritise corporate banking, given the high growth potential in this segment.
At the same time, SCB will continue to expand its SME and retail lending businesses selectively, with a primary focus on mortgage loans.