Siam Commercial Bank (SCB) plans to slow down its huge infrastructure investment budget this year to alleviate investors' concerns over the investment impact on earnings.
Arthid: Investor concern spurs rejig
The bank is lowering its 2018 IT investment budget, part of SCB Transformation, a five-year programme through 2020, said president and chief executive Arthid Nanthawithaya.
Under the amortised budget, the bank had planned to spend heavily on investment this year and less next year, he said.
SCB will likely review its investment plan to alleviate investors' concerns, Mr Arthid said.
The full impact from SCB's recent elimination of transaction fees for digital banking will be felt from the second quarter this year.
Massive investment, which landed a blow on first-quarter earnings, has whittled down investor appetite for the bank's shares.
SCB's shares have plummeted 17.3% year-to-date to 124 baht as of yesterday's close.
The bank reported a 4.6% year-on-year decline in net profit to 11.4 billion baht for the first quarter because of a rise in operating expenses for digital banking.
SCB's operational expenses totalled 43 billion baht, with another 4 billion for IT investment in 2017.
Under SCB Transformation, the bank set an investment budget of 40 billion baht, of which about 10 billion was spent during 2016-17.
"The bank set a high IT investment budget for this year and it is pressuring our earnings, so we will review the investment plan for this year and next," Mr Arthid said without mentioning an amount.
SCB's cost-to-income ratio increased to 42.3% last year from 38.7% in 2016. For the three months to March, its ratio climbed to 45.9%.
IT investment, higher operational expenses and a marketing budget to gain new customers during the digital era are key factors driving up the ratio, Mr Arthid said.
Consumer users of mobile banking app SCB Easy have increased to 7 million, he said.
Mr Arthid said SCB Transformation will strengthen the bank's infrastructure base and offer more opportunities to generate other income.
Digital lending, which generates better yields, is key for the bank. SCB has already adopted information-based lending services for all business segments.
