As the economic seas surrounding Thailand grow increasingly tumultuous, Siam Commercial Bank (SCB) is readying itself to batten down the hatches and weather the upcoming storm. For the next year-and-a-half, the bank will be focusing on scaling back operations in response to a series of financial challenges that threaten to turn into a perfect storm.
In a somber forewarning, SCB’s Chief Executive, Kris Chantanotoke, highlighted a dismal outlook for Thailand’s economy. Among the top concerns are ballooning household debt, sluggish economic growth, and the looming threat of U.S. tariffs—a triple whammy that necessitates a shift to a more cautious stance for the bank.
“The Thai economy, along with our business sector, is bracing for an intensifying wave of challenges,” Kris described, painting a picture of a turbulent horizon with sobering potential impacts.
A particularly alarming specter on the horizon is the risk of the United States implementing high tariffs on Thai exports. Given that a significant 20% of Thailand’s exports head to American shores, a boost in tariffs could spell a real headache, shaking the foundations of Thailand’s export-driven economy.
“Should Thailand face tariffs 10% higher than those of other regional competitors, the impact could be devastating,” Kris warned. Such a move could significantly undercut Thailand’s competitive edge.
The bank projects that Thailand’s GDP growth will run aground at a mere 1.5% in 2025, decelerating to just 1% in the latter half of the year—a grim statistic that whispers of a technical recession lurking in the shadows.
In response to these turbulent prospects, SCB is reinforcing its financial defenses by embracing a significant digital transformation. The bank aims to draw 25% of its revenue from digital banking by 2025, an ambitious target that promises a new frontier of innovation.
“Achieving our digital target this year will be a catalyst for further growth,” Kris declared, noting that diving into digital waters is expected to sink operational costs and reduce dependency on traditional branches.
Although the number of physical branches has already been trimmed to around 800 outlets, with more closures possible as digital adoption grows, Kris insists that traditional branches won’t be facing complete extinction yet.
“Physical locations will retain their crucial role,” he reassured, hinting at their evolving function in the banking ecosystem.
Additionally, SCB plans to intensify its focus on corporate banking, viewing this domain as a key growth driver. Simultaneously, the bank intends to be more discerning in its SME and retail lending, giving preference to mortgage and wealth management services for affluent clients.
Part of SCB’s strategy to remain agile involves further trimming its cost-to-income ratio, which has already dipped to a lean 36.8% as reported in Q1, aligning with its broader strategy to stay nimble in leaner times.
Thailand’s oldest bank appears to be cautiously navigating these precarious economic waters, wisely opting for a play-it-safe strategy in anticipation of the volatile ride ahead. Whether these preparations will anchor a secure future for SCB remains to be seen as the tides of economic uncertainty continue to rise.
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