Revenues jump, but digital banks yet to turn in profits

They are expanding offerings and moving into fee-generating products as part of growth path, experts say

- Chor Khieng Yuit

Digital banks have been up and running for about two years here, but turning a profit remains elusive as ever.

The three banks serving retail customers, GXS Bank, MariBank, and Trust Bank, reported an increase in total income in 2023—the latest numbers available as they report only full-year results—but fell deeper into the red.

"It is a journey. The digital banks are still in their early days," said GXS Group chief executive Muthukrishnan Ramaswami or Ramu.

GXS Bank, which is backed by Grab Holdings and telco Singtel, tripled revenue to $14.3 million in 2023. However, expenses mounted and sank the firm further into the red with a loss of $152.1 million.

Similarly at MariBank, which is wholly owned by gaming and e-commerce firm Sea Group, revenue jumped sixfold to $10.1 million in 2023, but losses came in at $52.2 million on the back of higher costs.

Unlike its two digital rivals, Trust Bank, which is 60 per cent owned by Standard Chartered Bank and 40 per cent by the enterprise arm of NTUC, holds a full bank licence that allows it to offer services similar to those at DBS Bank, OCBC Bank and UOB, including providing automated teller machines.

The bank stayed in the red in 2023 with a loss of $128.4 million despite revenue jumping thirteenfold to $39.1 million.

Ms Tania Gold, senior director for Asia-Pacific banks at credit ratings agency Fitch Ratings, said Singapore's digital banks are not expected to be profitable as they build market share in these early stages of growth. They have to incur significant costs to acquire customers, develop their technology and comply with regulatory requirements, she noted.

Typically, there will be two to three years of losses, added GXS' Mr Ramu, who said he is not in a hurry to grow the business.