Thailand: BBL to apply Bank Permata model globally

Bangkok Bank (BBL) is conducting a feasibility study on applying the retail business model of its Indonesian subsidiary PT Bank Permata to the bank’s international network.

The strong digital banking platform of Permata could open more opportunities in retail banking business for BBL in the regional market, said BBL’s executive vice-president Suwatchai Songwanich.

BBL, Thailand’s second largest lender by total assets, has the country’s most extensive international banking business network with a total 32 offshore branches in 15 economies, including wholly owned subsidiaries in Indonesia, Malaysia and China. It also has branches in London and New York to complement its Southeast Asian network.

In Indonesia the bank has a branch in Jakarta and two sub-branches in Surabaya and Medan. It acquired an 89.1% stake in Permata for 73.7 billion baht in May.

The bank is making a mandatory tender offer for the remaining 10.9% stake in the Indonesian bank.

Mr Suwatchai said Permata would revise some business plans in response to impacts from the coronavirus outbreak.

For its retail banking business, however, digital banking would be the key area to facilitate business growth.

Permata’s mobile banking app, PermataMobile X, is the most popular mobile banking service in Indonesia with more than 1 million downloads.

Given the strong brand of both Bank Permata and PermataMobile X, BBL will keep their existing names unchanged for business operations there.

“The advanced technology and breadth of features on PermataMobile X will support BBL’s digital platform development,” he said.

“Apart from banking services, PermataMobile X has 200 features covering advisory including bond investment, mutual funds, and insurance.”

With consumers’ changing digital lifestyle, platform development of the retail banking business of Permata could generate larger income in the long term, said Mr Suwatchai.

The income structure breakdown of Permata has corporate and small and medium-sized enterprise (SME) businesses contributing the largest income portion at 40% each, with retail business making up the rest.

President Chartsiri Sophonpanich said BBL expects to begin consolidating Permata’s net profit in the second quarter after the acquisition deal was completed in May.

Despite impacts from the pandemic, Permata has high business potential in the long run thanks to Indonesia’s economic growth.

Indonesia’s GDP growth for 2020 is expected to be flat or a marginal expansion of 1%, compared with the Thai economic growth forecast of a 8-10% contraction.

Mr Chartsiri said the bank plans to set aside additional loan-loss provisions in line with rising non-performing loans this year to strengthen the buffer for handling unexpected situations amid the outbreak.

The bank’s capital adequacy ratio as of March was 18.5%, of which 15.7% was tier-one capital base.

BBL shares closed on Monday on the Stock Exchange of Thailand at 106.50 baht, down one baht, in trade worth 602 million baht.