Sunday, 14 April 2024

Bank of Ayudhya partners Security Bank to tap Philippine consumer finance market

5 min read

By Janine Marie Crisanto

Thailand’s Bank of Ayudhya (Krungsri) is set to join Security Bank to infuse $62 million in fresh capital for the expansion of its consumer finance subsidiary, SB Finance.

  • SB Finance will issue 25,850,000 common shares which will be subscribed on a 50:50 basis by Security Bank and Krungsri
  • SB Finance will allocate the additional capital for technology and business expansion
  • The COVID-19 pandemic has impacted the bank’s asset quality and muted its retail loan expansion

Security Bank and Bank of Ayudhya (Krungsri), Thailand’s fifth largest financial group, received internal approvals for the $62 million (PHP 3 billion) capital injection to SB Finance. SB Finance is set to issue 25,850,000 common shares which will be equally subscribed by Security Bank and Krungsri. After announcing the partnership between the two banks in August 2019, Krungsri officially acquired 50% stake in SB Finance in October 2020.

Security Bank and Krungsri have Japan’s MUFG Bank as a common shareholder. MUFG Bank acquired a 20% stake in Security Bank in 2016, providing its global expertise which helped the local bank scale up its retail franchise.

Sanjiv Vohra, president and CEO of Security Bank, shared, “This additional capital infusion further cements Security Bank’s strategic partnership with Krungsri to help rebuild consumer confidence and foster financial inclusion”. Security Bank has been building and strengthening its retail banking business since its transformation in 2012. The bank has grown its market share in consumer lending from 1% in 2012 to 6% in 2019.

Leveraging Security Bank’s unsecured personal loan portfolio and expertise of Krungsri as one of the leading consumer finance players in Thailand, SB Finance is planning to expand its loan portfolio and offer a digital lending experience to individuals and small business owners. Security Bank has been growing its consumer lending over the years. As of third quarter of 2020 (Q3 2020), its consumer loan portfolio already contributes 26% of the bank’s total loan portfolio, which is a significant increase from the 5% contribution in 2013. The bank has been focusing on mortgages and auto loans as key drivers of growth.

Abbie Casanova, president and CEO of SB Finance, said, “As we anticipate the recovery of the economy and the resurgence of pent-up demand in the consumer finance segment, the additional capital will be used for business expansion as we are set to launch multiple products this year starting with Car-4-Cash, a loan product offering of Krungsri in Thailand. The additional capital will also be used to fund investment in the latest cloud-based technology that will support our end-to-end customer journey coupled with our digital transformation, and the strengthening of internal capabilities as we build and expand our operations”.

Amid the turbulent year due to the pandemic, Security Bank saw a 63% drop in its net income in the Q3 2020 to $21 million (PHP 1 billion) from $56 million (PHP 2.7 billion) in the same period in 2019. Its loan book also deteriorated as the bank reported a non-performing loan (NPL) ratio of 4.0% in the first nine months of 2020 – a sharp increase from the 1.2% NPL ratio in 2019. A muted retail loan growth is also expected for the bank in 2020.



Keywords: Bank Partnership
Institution: Security Bank, Bank Of Ayudhya, SB Finance
Region: South East Asia
People: Sanjiv Vohra, Abbie Casanova
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