Local banks are keen to jump on the digital bandwagon. But TMB Bank chief executive Boontuck Wungcharoen believes size still matters for the banking business and his company should brace for mergers and acquisitions (M&A) that might happen in the future.
A mid-sized bank like TMB could either take over other financial institutions or be bought by a bank, he told the Bangkok Post.
The total asset size of Thailand's banking industry is half that of Malaysian banks, which in turn is half the size of Singaporean banks. Compared with the global banking industry, Thai banks are tiny and it's not easy to compete in the changing landscape, he said.
TMB is preparing by strengthening the bank's culture for any M&A opportunities that may arise in the longer term.
"A strong culture helps maintain the bank's DNA and creates higher value," Mr Boontuck said. "Strong culture is a buffer against any changes, including mergers."
The Finance Ministry and ING Bank are TMB's largest shareholders at 25.9% and 25%, respectively, according to Stock Exchange of Thailand data.
Digitisation is a key factor leading to big changes, while TMB has continued to change its organisation and culture over the past 8-9 years under the "Make a Difference" concept.
With digitisation, the bank has revamped several rules and conditions, including executives' authority, to turn the country's seventh largest commercial lender by assets from a bureaucracy to an agile organisation.
TMB's second-tier executives share a working room under the agile organisation pilot project, implemented a month ago, and Mr Boontuck will join the same working room as his subordinates in the next stage.
"Digitisation doesn't mean only the mobile platform, but it should be built into the overall organisation and the mindset of all staff. TMB has no exact time frame to complete it because it's an ongoing process," he said.
Under the "Make a Difference" concept, TMB has replaced its image as a military-controlled bank with that of a full-blown commercial bank and has positioned unique products for customers, including Me by TMB -- a self-service savings account with a high interest rate -- and TMB All Free -- a savings account that allows holders to withdraw cash, transfer funds or make bill payments free of charge without limits on the number of transactions.
Mr Boontuck, who is due to retire next year after being at the helm since July 2008, has also put a succession plan in place.
According to TMB's rules for chief executives, he will prepare three candidates for the position, he said, without naming prospective successors.
The bank's chief finance officer, Piti Tantakasem, is speculated to be the frontrunner. Mr Piti was promoted to his current position in June this year after serving as chief wholesale banking officer since November 2008.
TMB's net profit for the July-September quarter amounted to 2 billion baht, rising 8.69% year-on-year, due to higher non-interest income. For the first nine months, non-interest income was 9.23 billion baht, surging 22.8% from a year earlier.
Asset quality is expected to continue to improve after the bank's non-performing loan (NPL) ratio peaked at 2.5% in the fourth quarter last year, he said. As of September, the bank's NPL ratio was at 2.44%, partly due to data analysis developments.
Mr Boontuck said customer information is a key factor for both business expansion and asset quality control. With big data analysis, the bank has managed to control the NPLs of the small and medium-sized enterprise (SME) sector.
Despite a 2.6% decline in the bank's SME loans during the first nine months, TMB managed to expand its total loan portfolio by 4.4% to 619 billion baht. The positive loan expansion was driven by healthy growth rate of retail loans at 17.9% and corporate loans at 3.2%.
