SCB’s digital transition to spur cost cuts
SIAM Commercial Bank (SCB) Plc is shifting to digital banking to improve its services in wealth management, payment and transaction banking, and lending for personal and business customers as part of a reorganisation that will see it cut business costs by up to 30 per cent by 2020.
Under its business plan, the bank will reduce the number of its traditional branches from 1,153 nationwide to 400, and also cut the number of workers from 27,000 to 15,000 by that year, the bank’s president and chief executive officer Arthid Nanthawithaya said in a press conference outlining SCB’s Vision 2020 plan yesterday.
He said that while bank is reducing the number of traditional branches, it will open a new branch model that provides for a business centre and investment centre, seeking to strengthen its relationships with customers, especially personal and small and medium-sized enterprises (SMEs) account holders nationwide.
Arthid said the bank had no plans to lay off excess staff in the branches and in other departments. Instead, the bank would retrain them to serve the needs of the bank’s new business model and match with the bank’s new business model. The bank also would recruit new staff to support this model, he said.
“We no plan to lay off our staff, but usually the number of resignations from the bank averages 3,000 a year,” he said. “This means we do not have any programme to lay off staff. With this pattern of natural attrition, we will be able to reduce our staff numbers to match our target of 15,000 in 2020,” he said.
The bank’s revised business model focuses on attracting new customers in the areas of personal loans, credit cards, and SMEs, rather than expanding into areas where there is high competition, such as housing loans, Arthid said.
“That does not means that we won’t provide mortgage loans or corporate and infrastructure loans, as we will continue to provide loans for such customers, but we will focus on high-margin business,” he said. “If a market faces high competition in term of price, we will not compete in that area. But we will focus on the new areas that provide high margins for us.”
The bank will collaborate with its customers and may enter joint ventures with its business partners to match with customers’ lifestyles and drive business growth for the long term. Such areas include health and wellness, lifestyles, living, technology and digital services, e-commerce, food and restaurants, energy, supply chain logistics, wealth and insurance, travel, university, and retail, he said.
New business model
With the new business model, Arthid accepted that the company’s total revenue may drop but its net profit margin will be maintained and move higher than the current level, he added.
At the end of 2017, Siam Commercial Bank announced total income of Bt136.2 billion, up 2.2 per cent from 2016, and net profit of Bt43.2 billion, down 9.4 per cent.
Meanwhile, the bank reported to the Stock Exchange of Thailand that its financial targets for 2018 were for a net interest margin of between 3.1 per cent and 3.3 per cent, non-interest income growth of up to 5 per cent, a cost to income ratio of 42-45 per cent, loan growth of between 6 and 8 per cent, non-performing loans at lower than 3 per cent of the total, and a coverage ratio of more than 130 per cent.
