Thai virtual banks expected to lose money in early years

Brokerage KKPS says growth constrained by regulatory framework focusing on risk management

Virtual banks in Thailand are likely to incur losses during the initial stage of operations due to the regulatory framework governing the sector, according to Kiatnakin Phatra Securities (KKPS).

Based on the experience of virtual banks in overseas markets, the first-year return on equity is typically negative, averaging -29%, the brokerage says.

Among Thailand's three licensed virtual banks, Clicx Bank, a joint venture between Krungthai Bank, Advanced Info Service (AIS) and PTT Oil and Retail Business (OR), is scheduled to launch on Friday as the country's first virtual bank.

Bank X, established through a partnership among SCB X, South Korea's KakaoBank and WeBank, is preparing its internal operations and is expected to commence services by year-end.