February 26 2024

Grab made a profit in Q4 but challenges remain

Written by Kapronasia

Given that ride hailing and food delivery tend to burn cash, Grab’s profitable fourth quarter augurs well for the Singapore-based company, especially considering brisk growth in its fintech services. However, we should keep in mind that it was a modest profit of US$11 million, which seems to have come about in part due to a "reversal of an accounting accrual," according to a statement by the company. Revenue in the October-December period, meanwhile, reached US$653 million, ahead of a consensus estimate of US$629 million.

Despite recording a profit in the fourth quarter, Grab still lost money overall in 2023. And it was no small sum either: US$485 million. Of course, when we consider that this marks a 72% improvement over 2022, then it is clear that Grab is moving in the right direction.

Grab’s management emphasized during an earnings call that the company’s ride hailing and food delivery businesses have completely recovered from pandemic-induced travails. While that’s all well and good, we still have some questions about how either of those businesses will be profitable in the long run. GoTo cannot make them profitable yet, and Uber has been struggling with those segments for years.

Grab’s management seems to believe that the company has cultivated user loyalty over the years and one imagines that it is true to some degree. However, the Grab brand is still nascent, and is not something that consumers covet. Further, the product itself is ultimately not hard to duplicate, in contrast to say, the comprehensive ecosystems of Apple, Alibaba or Kakao.

We reckon that the Singapore-based super app’s future may hinge on the success of its digital financial services unit. Grab figured out early on in its fintech experiment that payments alone would never be sufficient to deliver attractive margins and to its credit it has been laser focused on developing higher margin financial services, from its home market to Malaysia to Indonesia.

To that end, in the fourth quarter, Grab’s financial services revenue doubled to US$56 million. The solid annual growth was primarily attributed to improved monetization of the company’s payments business, higher contributions from lending, and “lowered incentive spend” – which is crucial to ensuring the company’s business model becomes sustainable. With regards to lending, Grab said that for the year, total loan disbursements grew 57% year-on-year to reach US$1.5 billion, while total loans outstanding amounted to $326 million as of December 31, 2023.

Meanwhile, customer deposits in GXS Bank and GXBank, its digital banks in Singapore and Malaysia respectively, stood at $374 million as of December 31, 2023. GXBank was the first digibank to launch in Malaysia, following a rather drawn-out three-year process (not Grab’s fault) and reportedly attracted 100,000 depositors within two weeks of its launch, 79% of which are existing Grab users.


Since Singapore and Malaysia are both well banked markets, with limited low-hanging fruit, Grab will have to find a way to stand out from the competition. The synergies it can tap from its customers and drivers in mobility and delivery will be crucial to this endeavor.