Unsurprisingly, Grab’s management put a positive spin on its second-quarter performance. “We delivered robust top-line growth across all of our segments,” chief financial officer Peter Oey said in a news release, adding that the company now expect to achieve positive adjusted free cash flow for the full year in 2024.
Customer deposits in Grab’s digital bank business – which operates in both Singpaore and Malaysia - grew to US$730 million in the second quarter from $33 million in the same period last year and from US$79 million in the fourth quarter of 2023. GXBank, Grab’s Malaysian online banking unit, now has 750,000 deposit customers.
Meanwhile, total loans disbursed grew by 43% on an annual basis and 4% sequentially to US$500 million. Grab’s total loan portfolio outstanding at the end of the second quarter grew 71% year-on-year to US$397 million from US$233 million during the same period a year ago.
On July 30, GXS Group CEO Muthukrishnan Ramaswami told Bloomberg in an interview that the Singaporean digibank expects to swing to a profit by March 2027 in part by doubling its loan book every six months. “We’re not competing for the same customer that the big bank is trying to get,” Ramaswami said. “There are so many people who are underserved that there is enough money to be made by serving them.”
This looks to us largely like old wine in a new bottle. While Singapore does have SMEs who are underserved by traditional banks, there is plenty of competition to win their business among fintechs. This includes two Singaporean digital wholesale lenders, Ant Group’s ANEXT Bank and Green Link, who are entirely focused on the non-retail segment.
In the interview with Bloomberg, Ramaswami mooted goals such as reaching S$3 billion in deposits and a S$2 billion loan book by 2027. At present, GXS’s average Singapore loan size is roughly S$6,000. Higher volumes and cost-effective digital channels will increase profits, he said.
That remains to be seen. There is no natural segue from those ride hailing and food delivery to banking. The latter is built on customer trust and requires a different kind of relationship with customers than what exists for ride hailing and food delivery.
Investors seem to have their doubts about Grab as well. The company’s stock price has plummeted about 70% since it listed in a SPAC merger on the Nasdaq in December 2021.