SCB X Public Company Limited (SCB) Earnings Call Transcript

Okay. So good afternoon. I hope you can hear us well. We have a little bit of trouble with the audio on this side. I hope you guys hear us well. If not, please feedback in the comments section so the team can handle. So welcome to our first quarter earnings call. It's been a relatively interesting quarter, as you can see, with the -- kind of started the year relatively -- global economic-wise started the year quite strong. But of course, the war broke out towards the end of the quarter. So that presented some challenges, which Dr. Yunyong will cover us. So as usual, we will start with the macro update and coverage by Dr. Yunyong, and we will come back and give the highlights and of course, plenty of time to do the detailed Q&A from you guys. So without wasting more time, so we will hand it over to Dr. Yunyong to actually take us through the macro update.

Thank you. Good afternoon, everybody. Certainly, the global economy is being affected adversely by the ongoing conflict in the Middle East as well as the energy prices that followed. We project that global growth will slow down further with higher inflation. So as economists call this phenomena as a Stagflation risk. Certainly, for Thailand, we have also been hit quite significantly by this shock as well, given our reliance on oil import and also relatively low energy efficiency. So we have cut the GDP growth in the baseline scenario to 1.4% from 1.8% with a significant rise in inflation to 3.2% this year from early on, only 0.2%. At this time, we believe that the Bank of Thailand will take a wait-and-see approach and likely to hold it for the time being. We don't think they necessarily have to raise the rate to defend the baht, given that I think we have a relatively strong reserve position. But towards the end of the year and early next year, I think the decision by the MPC will mainly be data dependent between the outlook on growth and inflation. So let's look at some of the important details. Next page, please. The current oil shock is different than past oil shocks, right, because this time the actual loss of supply via the Strait of Hormuz accounts for 20%, both for oil -- global oil supply and also natural -- global natural supply as well with most of the oil export from the Strait of Hormuz coming to Asia. So Asia, particularly will be hit hard by this conflict. Thailand relies on oil import up to 57% of total import from Middle East. So that's why it really have an important impact on Asia. Certainly, we look -- follow and monitor closely in terms of the oil shipment through the Strait of Hormuz as well as the Yanbu and Fujairah ports. Right now, the average is about 40% of the normal delivery. So that means 60% from the Strait of Hormuz is still missing from the global market. Next, please. So that's why -- that's the reason we have seen the rapid increase in energy prices, whether it's crude oil, but particularly refined products such as diesel, that have jumped up significantly. Also, the cost of shipment around the world have increased as well. On the right-hand side, you can see that this is not only limited to energy prices, but spread to other products that -- which is related to energy products. Mainly one of the products we are following closely is fertilizer that will have a strong implication to the Thai economy that rely on agriculture products. Now we are looking at this as scenario planning, right? So we basically assess the situation in the Middle East war through three scenarios. I think in terms of the war duration, that's maybe less important right now because we know that even if the shooting have been -- has [ stopped ] for the past two weeks, but the energy supply through the Strait of Hormuz still missing from the market. So, I think, our key assumption, even though we still say that in the baseline, the invasion of the war will end in May, as you see the polymarket on the right -- bottom right corner. I think the financial markets believe that the odds that the shooting of the war will end in April is quite high. But that's not, as I mentioned, that's not the main point that we need to focus on, but we should focus on how long and how fast the energy supply through the Strait of Hormuz will come to, or close to, the normal level. And so we believe in the baseline that the supply recovery should resume to around 80% of the more normal level by Q3. And in adverse and severe case, the supply rebound will take longer. I think the one that capture the sense of these three scenario is the average Brent price for the year. So in the baseline, it is $85 per barrel. At worse case, it is $105 and severe case, which is a tail risk, it is $120. If you look at the forward curve, the dotted -- the brown line, that is the latest forward curve on April 20th and you see that it is close to the baseline scenario, given that right now the situation in the Middle East has calmed down a little bit. Next, please. So as I mentioned, we forecast that the global economy will slow down from previously, we forecast pre-war and the global GDP would be at 2.7%. Now we call for 2.5%. Actually, we have already the slowdown in economic activities around the world in March. The financial market also responded. We have seen CDS for many countries have jumped up, with Thailand in the group that has had a significant increase in CDS over the past month. Why is that? As I mentioned earlier to you, this is relatively weak structural point for Thai economy. We are the country that rely heavily on net oil and gas -- with net oil and gas import bill accounting close to 8% of GDP. The energy weight in CPI is also relatively high. And on the right-hand side, as we represent here energy intensity. On the flip side is the energy efficiency, for this, Thailand still have relatively high energy intensity or another way of saying have relatively low energy efficiency. So that's why the increase in oil and energy prices will hit Thai economy quite significantly. And as I mentioned, in terms of the financial market, we have seen the reverse of the baht from last year that's among the strongest in the region. Now, with the ongoing oil shock, we have seen the baht turn weaker over the past 1.5 months with also the yield curve have increased throughout both in terms of the Europe market and also EM, including Thailand. Next page. In terms of the impact on the Thai economy, I think there are three main channels. The first one is the high energy cost. So that will increase the cost of living for household sector and also increase the production cost for the business sector. So that will lead to lower spending power and lower business margin. The second channel is the global growth slowdown that would affect both our export and also our tourism sector. And the third is market volatility that will increase in terms of the risk premium and also could cause baht depreciation that could further boost the inflation risk further. As I mentioned, so -- this is what we call stagflation risk with slowdown in spending and higher inflation. One thing that we need to monitor closely in terms of fiscal policy, as we have been pointing out for some time, the fiscal space is quite limited given that the public debt to GDP is close to 70% ceiling. But we have heard over the past few days that the government may be considering -- I mean, they need to lift the ceiling anyway because without any additional borrowing, even without additional borrowing, the public debt will hit the ceiling within this year anyhow, right? So given this channel of impact, we are forecasting that in the baseline, we cut GDP forecast to 1.4% from 1.8%. But certainly, there's still a lot of uncertainty, not only what is going on in the Middle East that can change from day-to-day, but also in terms of the impact on the Thai economy as well as other challenges, whether it's the Trump tariff policy that -- given that Thailand is also one of the -- among one of the countries that are being investigated under 301 Law by the U.S. for further tariff imposition. Let's quickly look at some of the key issue for the Tai economy in terms of the oil fund policy that the government has used as a main mechanism to provide support to the consumer. Right now, the net balance of the oil fund is at negative THB 60 billion. And the good news is that with the lower oil price in recent days, the net outflow of the oil fund has slowed down significantly. In terms of the impact on the inflation, I think part of -- good news is that we are coming from a very low base. As you recall, last year, we have a negative -- minus 0.1%. So this year, inflation will be much higher. But still we look at the number to be about 3% to 4%. So that may be above the Bank of Thailand target a little bit, but not as much as the 6.1% in 2022 during the Russia-Ukraine crisis. Next, please. Certainly, this oil shock, the increase in energy prices will add on to the challenges that the household sector are facing. We already noted in terms of household debt to GDP that even though it's coming down, it's still relatively high, and we believe that the household -- Thai household is still on the deleveraging path to cut on consumption or borrowing, while trying to increase the income if possible. But that would be relatively challenging. We look at the real wages. Real wages still not come back to the pre-COVID level. And with this year's high inflation, we expect real wages for Thai households or Thai labor be probably coming down further, okay? Another data that we are monitoring closely is in terms of firm opening. On the right-hand side, you can see that last year, the business opening in Thailand was negative 2.7%. And this year for the first 3 months, it still continuing negative 2.5%. So that's a challenge for both in terms of investment and also in terms of employment. Next, please. In terms of the sector that will be expected to be impacted significantly from this ongoing crisis. In terms of the export market, there are a few of the sectors that rely mainly on the Middle East, but those are in terms of wood products, rice, canned tuna, passenger cars, but would not have a significant impact on the overall export. Other sector that will be hit hard including transportation, real estate and construction contractors that are faced with much higher production costs, as well as the petrochemical and gas-fired power plants. So those are some of the sectors we are monitoring closely. Next, please. I mentioned to you in terms of the fiscal space that are quite limited with Moody's and Fitch have placed Thai sovereign credit rating on negative outlook since last year. And on the right-hand side, as you can see that currently at 66% public debt to GDP is rising fast. And so the government will likely have to lift this ceiling. But what's unclear is how much they would like to borrow to stimulate further economy. So we need to get more clear picture on that. But certainly, the fiscal space is quite limited right now. And last, I would like to end with the MPC of Bank of Thailand policy rate direction. We believe that Bank of Thailand will not necessarily have to raise rate, despite our relatively vulnerable position to oil shock. But given that we have a strong international reserves and relatively low external debt, I think the baht depreciation will be orderly. And so the MPC would likely to keep rate for the time being and take the wait-and-see approach. As you can see on the middle panel, private credit growth continue to be negative. And so this reflects quite tightening financial conditions. So MPC would likely keep the rate low for the time being. And towards the end of the year or early next year, then we can depend on the data at that time between the growth and inflation, then that may dictate what MPC will move next. So that's the summary of our assessment of the economic situation.

Thank you, Dr. Yunyong. So as you can see, the situation, the outlook is relatively challenging and situation remains volatile. Internally, we continue to upgrade and update the scenarios almost on a daily basis. And certainly hopefully, things will clear up in the next few weeks so that we actually get more clarity. So for the rest of the discussion, I'll be joined by Dr. Somprawin, Deputy CFO; and also Khun Munmun, the Head of Corporate Finance and Investor Relations, to walk us through the numbers. But Dr. Yunyong will remain with us towards the end to answer any questions that you might have, particularly on the macro situation. So on the highlights, which I'll touch on quickly, and Khun Munmun will deep dive into the specific numbers. Despite the relatively challenging first quarter and the situation and the macro, I think our performance remains relatively robust on the back of strong fee income and selective credit growth and also fairly stable asset quality. And specifically, the net profit, as you already seen in the release, THB 10.2 billion, relatively flat Q-on-Q, but a material drop 18.5% year-on-year. And that is to be expected, in some sense, because of the rate cuts from BOT -- but at the same time, we also have some volatility in terms of the investment income relative to the first quarter last year. All these things, despite challenges from the macro and the rate cuts, the performance shored up by strong fee income from wealth management, transaction banking and other lending-related fees as well as the disciplined cost management, which we've been essentially on over the past few years to modernize our infrastructure and keep our cost to income at a very low level. The loan book, as I mentioned, this is actually probably the first quarter that we witnessed some expansion in the loan, but it is selective. That's the keyword that I would like to emphasize, that it is not broad-based, and we are not yet ready to get on the kind of rapid expansion of the loan growth. Admittedly, in the beginning of the year, we were thinking that we would actually continue to expand, but because of the macro situation like this, we remain cautious about the expansion, but we managed to actually grow quality loan book over the past 3 months from SCB Bank as well as Gen 2, MONIX, Abacus and AlphaX continue to expand the loan growth. But the tone from the top is that to make sure that this is actually quality growth, and that we are not chasing after quantity at this point. So with that, we managed to get year-to-date expansion of about 3%, which is an encouraging sign. We'll talk about the outlook further. relatively stable asset quality. NPL still stands at around 3.2%. That's based on essentially proactive risk management and collection efficiency that we've managed to actually also improve over time through technologies and through discipline. So that has managed to allow us to keep the asset quality relatively stable. Also, a major milestone update is the setup of BankX, which you've probably seen in the news already, and we are looking forward to -- we're working around the clock to set up this operation. We hope that we'll be able to get through the process and start operating and offering service towards the end of the year, this year or beginning of next year, where we'll be able to introduce innovative banking through the virtual bank license or BankX, that's the name of the company. Now having said that, right, I think the tone for last few weeks and definitely for the upcoming months, until the situation clear up, we remain cautious, and we want to make sure that we take care of the customers. That's probably the most important thing. The customers do need support and help from us, and we need to be able to identify the customers that we need to really extend the helping hand and also manage what might be essentially otherwise challenging impact. So that's something that we will be actively working on. So the strategies will remain adaptive and also depending on the situation, which, as I mentioned, it changes almost day to day. But hopefully, we'll get some clarity and then we develop internal scenario planning for different situations. But keep in mind that we'll need to be quite robust and be able to adapt quite rapidly. So I would not read into a particular direction too strongly. But suffice to say that we keep in mind, we take care of the customers and also make sure that we are healthy in the long term, not chasing after some kind of quantitative impact in the near term. So that's something that we'll be actively working on over the next -- for the rest of the year. So that's the highlights, robust performance and then with some positive news around the new growth that we are hoping to get from BankX and the cautious tone that we take for the rest of the year. On the specific number, I'll ask Khun Munmun to actually walk us through, and we'll come back and answer specific questions that you guys might have.

Okay. I'll go quickly into each of the elements that we have. So for the revenue, overall revenue basically declined 8% year-on-year. This is based on total 5 rate cuts in end of 2024. So that impacted our net interest income the most. Fee income, on the other hand, basically grew 18% year-on-year, and this is driven pretty much by the continued strength on the wealth management part. Investment and trading income declined 67% year-on-year, 77% Q-on-Q. This is largely from the mark-to-market, lower mark-to-market gain at SCB Bank and SCB 10X. When we look at the loan book, as Khun Arak mentioned earlier, this is probably the first time -- first quarter in many, many quarters that we saw a decent expansion in loan growth. And this is driven mainly by the corporate loan that came in at the late quarter. So when you look on the right-hand side, you see that the NIM fell a little bit lower than our guidance, but this is mainly because of the loan that came in at the quarter end. So next quarter, we should see overall NIM stabilize from this point. Loan overall in Gen 2 and Gen 3 still have a little bit of growth coming from CardX, overall transfer of the credit card portfolio from SCB Bank and also some product, especially in the Speedy Cash that see slight growth. And apart from AutoX, we also see selective growth in other companies in Gen 2 as well. In terms of yield in each product, right, across the board, we see the yield basically came down on the rate cuts. As we mentioned earlier, on the corporate loans, the NIM -- sorry, loan came down by 42 basis points. But again, that's very much on the higher loan growth at the end of the quarter. AutoX on the right-hand side, we see lower yield as well, but this is on the back of the rationalization of the loan book at AutoX. CardX, on the other hand, the lower yield is rather technical because we brought in overall book from the SCB Bank from the Wealth Card. So you see the denominator that is bigger. That's why we see the loan yield coming down. In terms of overall fee income, as we mentioned earlier, the wealth management continued to be the key contribution to our fee income, still managed to grow 23% Q-on-Q and 33% year-on-year amid the volatility that we have in the market. So the feedback from the front line, both at SCB Bank and InnovestX, dealing with customers, the recent volatility at this point still present the opportunity for customers to invest. Hopefully, if things settle down a bit in the next few quarters, overall, wealth management, we hope that it will be okay for the rest of the year. However, if situation in the Middle East when worsen or deteriorating, we might see this portion of the wealth management lower down as well on the subsequent quarters. Bancassurance stability, basically growing 23% Q-on-Q and flat year-on-year. In terms of OpEx, we continued to be very strict on the cost management, see slightly lower overall OpEx minus 2% year-on-year, minus 6% Q-on-Q. On the cost-to-income ratio, at the moment it's 42.4%, relatively stable compared to the last quarter. Asset quality, relatively stable, I would say, although overall, if you look at the credit cost compared to last year, right, we had a management overlay set aside last year. For this year, you will see that overall, the asset quality came down THB 2 billion, while total allowance remained the same at THB 155 billion. NPL coverage ratio actually edged up a little bit by 162%. We will see that loan staging on Stage 2 declined a little, while Stage 3 also quite stable. NPL ratio this quarter is 3.23%. And this is basically on the back of the NPL management as well as prudent collection as well. In terms of liquidity, the bank's position still remains solid. LD ratio overall is stable at 87%. We have seen higher deposit coming in and we can discuss more into the detail. As the situation is volatile at this point, we see the -- as a big bank, as one of the big banks, we also see some -- we also see customers and see deposit inflow coming into us as well. In terms of the outlook and first quarter results, overall, if you look at the first quarter results against our target, we will see that everything remains in line with what we gave you in the beginning of the year. However, we're still assessing and this is still early days in terms of the overall impact that the Middle East conflict will impact to us. So with that, I will conclude the presentation and open the floor for Q&A, please.

We have the first question coming from Khun Weerapat at CGS.

I have two questions. The first one regarding bancassurance fee income in the first quarter. The Q-on-Q growth rate was robust, although it is not high season. Can you share what the reason behind the growth? And is this related to ultra-high net worth wealth clients? The second question, SCB Bank last year targeted to be #1 in wealth management business. Is this based on number of customers or assets under advisory? Can you please elaborate this year's target for wealth management and your achievement so far? So that's all from me.

Okay. Banca, I would say, partly, it is because of the seasonal as well. We know that fourth quarter normally is a low season for banca and insurance because it's already in the end of the year. But this year, particularly from the flat performance year-on-year, we see slight improvement in the insurance related to life insurance and also insurance that is related to the wealth segment. In. Terms of the wealth management question that you asked, this is the area that we believe that -- it's not the area that we compete exactly with our competitors, but more to compete with ourselves by deepening the pocket of our current customers. So at this point, we still see quite decent opportunity to deepen the pocket of existing customers. I believe that we have the AUA number for you, which is the high single-digit growth. So if the Middle East conflict is not too severe -- sorry, 6% AUM growth on a year-on-year basis. So if situation in the Middle East is not too bad, we believe that our customers, our clients will remain -- will stay invested. And we should be able to grow at a high single-digit overall. Sorry, the second question comes from [ Zhixuan ].

Just on margins, because I saw our corporate loan growth went up 10% quarter-on-quarter, which we talked about bringing back an order. Just wondering how do we get so much demand on corporate? Is it just to one large -- mostly to one large corporates that suddenly there's a demand? Or how should we think about that?

So on corporate, it's actually one of the -- as we started the year, it was actually one of the target segments. So we have a number of large corporates that actually we've been -- that have strong relationship with. But indeed, there's also one large transaction that we participated in, but it's not coming from just one. It spreads out to a number of large corporate clients. So it's relatively diversified, but yes, the quantum does have an impact on the large transaction that just got concluded towards the end of quarter 1.

Got it. And should we think about rest of the quarters this year, the mixed impact to be slightly negative because at the end of the -- before the war, we were talking about we want to grow a little bit more higher yield for the mixed impact to help this year. But given the situation on the war, should we assume that going forward, the mix impact should be a little bit towards more negative side?

Yes. I would say as far as we can tell right now, because like the situation remains volatile and things develop by the days. At the moment, we are taking a cautious stance. We are doing sensitivity optimization to make sure that we prioritize quality over quantity, and that may translate to essentially slower loan growth than the target. But that's not -- so that would be kind of a valid reasonable baseline assumption. But as the situation changes and hopefully develop for the better, we could actually reengage because there's actually a latent demand for growth for loan. But right now, I think it's just too difficult to tell, and therefore, we take a little bit of more time to take cautious stance on this one.

Got it. That's very fair. And next one is on the mark-to-market gain, the FVTPL this quarter. Do you mind breaking down a little bit roughly into bonds and equities? That's number one. And number two is, obviously, it's hard to forecast, but is the first quarter level roughly where we should think about it for the full year?

Okay. I'll take that question, Zhixuan. I think mostly for the FVTPL, it remains debt rather than equity, although we have some part of equity, but majority, I would say, debt. And this is -- if you look at the end of the quarter, which is when it was marked down, I think it was at the height of the situation in the Middle East as well.

Yes. So that's what I am wondering because the debt portion should be negative, right, because bond prices, but the FVTPL there's still THB 2 billion odd, which is positive. So that's all coming from equities.

The overall -- you mean the gain, right?

Yes, the gain, right, because bond prices are down quarter-on-quarter, right? So it's all from equities, is it?

Not really. I think it's the fact that we also have a bit more investment as well because you see when we see the bond yield come up, right, it's also an opportunity to engage into the investment.

I see.

Yes.

Okay. So for the first quarter, for the full year, at least for internal budgeting purpose, is the first quarter more of the bond rate that we're thinking about? Or how should we think about this as investors?

You mean for every 2PL, right?

Yes, the mark-to-market gains.

Quite frankly, it's hard to say, right, because we don't know how the situation will develop for the rest of the year, frankly.

So I would kind of elaborate a little bit on this one. As you -- I think you probably picked up from our release that the investment volatility is what's driving the drop, relative to year-on-year, right? So what we are seeing at the moment is that we will kind of continue to be managing -- risk managing the whole thing. But as Khun Manman also mentioned, we see quite a bit of liquidity coming into our book being one of the larger banks. So we see that. So we are actively managing to make sure that we deploy that capital or that deposit -- liquidity properly, right, to get, not the negative carry or just the flat repo, but kind of put it into good use. But at the same time, we need to manage between the impact on the yield and the mark-to-market and the gain. So a lot of these things are under kind of review, and we want to make sure that we're prudent about this. So as appropriate, we'll probably realize some gain and there might be mark-to-market gain or loss according to what, I think, what you're alluding to. But in the end, we want to make sure that we stabilize and manage the liquidity as well as manage the overall hedging of the interest rate in a proper way. So that's why Khun Manman said it's a little bit difficult to give a strong guidance. And I wouldn't necessarily say Q1 is a proxy. There are several quarters because it does depend on the situation, and we'll -- but it should be -- the theme should be we will manage in terms of liquidity management as well as risk management to make sure that we use investment appropriately in that sense.

The next question comes from [ Khun Peach ].

Hello. Thank you for taking questions from me. It will be one by one for four short questions. The first one would be what wealth products that have boosted the performance in this first quarter? And will it sustain throughout the year?

So wealth products for this year mainly is -- there's a lot of -- there's foreign securities. There's also some [ KIKO ] as you know. There's also capital protection products as well. So all sorts of product you need.

Okay. Second one will be about the Tier 1 ratio that came down a lot like 1 percentage point year-on-year. I read the M&A already that did explain that it is because of the retained earning allocation to dividend, but still quite curious that is there any other reason because it came down a lot? It is 17.8 down to 16.8%.

Okay. So if you look at -- so basically, if you look at the risk-weighted asset, right, because it's a combination of that as well because our risk-weighted assets also grew about THB 1 billion.

Why risk-weighted asset has increased?

Because of the loan growth.

Because of the loan growth, okay.

Yes. Yes, pretty much, yes. If you look at the total capital, right, if you look on this chart on the right-hand side, yes, you see that the risk-weighted asset basically grew about THB 1 billion. That's why, yes.

The third question will be about the financial targets. At the moment, it's too early to really adjust any targets, but can you give some hints that what targets you think will have risk on the upside or downside from here, after Q1? NIM already below the target, but I think that will -- it could be the bottom as well for Q1, yes.

Yes. I think the -- as mentioned from the team about being selective, right? If we talk about the loan growth, probably on the low side of things, right? But certainly, we -- yes, if you ask in terms of directional guidance, that will probably be on the low side of things, likewise for net interest margin, right. The fee income, we're quite positive and hopeful we'll be able to kind of be in the mid- to high end. Cost to income is going to have some pressure in terms of depending on the top line. The cost management is still on track, but the revenue and that -- which will be the case. And if the loan is on the lower side, the cost-to-income is probably -- therefore, it's probably going to be on the slightly higher side of thing. Credit cost, right now, we are just about at the top end of the guidance. And this one is actually depending a lot on the situation that we see forward, right? If things stabilize from here on now, probably kind of within the range, but if things deteriorate further, then that's something that we need to -- we kind of look into that.

From the cost-to-income side, we saw the SCB and other banks has cut costs quite decent in first -- Q1, but is this just starting and we can cut even more for the rest of the year or Q1 would be the momentum at best effort that the bank can do already?

You mean, for us? We've been essentially on the cost management discipline over the past few years, right? So you can probably see that we -- our cost base continued to decline and cost-to-income continued to improve, right? So I think the rate of improvement and the momentum may be not similar to other banks who only -- I won't comment relative to other banks, but I would say we continue to be on kind of disciplined cost management. We feel that there's still room. But fundamentally, if you really -- which is something that we're working towards is to drive up the productivity and efficiency through connect technology through AI, which is something that we see prospect, but that one still kind of will be the next wave, right? But the current wave of continuous discipline that's still giving us some momentum. But I would say it's probably not going to be as deep of a cut compared to what perhaps you have seen in the past, right, because we are already quite lean and efficient in cost-to-income relative to other large similar sized organizations.

Okay. Last question. The big impact to NIM in the first quarter apart from rate cuts, that is also related to debt restructuring or not? Because if I look at the accrued interest receivables over the past year, it kept rising every quarter. And we also had rate cut every quarter last year that NIM also down manageably, but Q1 yield down a lot. So what happened is the accrued interest receivable began to stable in this first quarter. Was it because we approached a 1-year grace period? And then we restructure again and give some interest haircut. So that reflect in the yield.

It is sometimes when we look on the quarterly path, right, you will see that some quarter, we have lower or deeper, some quarters better. I think it has a lot of factors actually. But I can tell you that we have not seen higher restructured loans per se. In fact, I think overall asset quality, right, on the overall book seems to look -- yes, at least stable, yes.

Yes, it might be like the old restructured customer that we restructured again. So the percentage of restructure does not change, but...

It does not change much really. We have the next question from Khun Tanawat at TISCO.

I have 3 questions. I'll go one by one. The first one is, could you please share your thought on Home Credit Vietnam? What was the problem? And looking back at the deal cancellation, we should see positive or negative to your outlook?

So it also has to do with the rules and regulations, right? I think both parties were trying very hard to make sure that we actually can pursue the deal. But at the same time, there's some regulatory constraints that eventually pan out,, that did not work out in the way that we would have liked. So by that statement, it also implies that we would have preferred that to happen, because that's consistent with our direction in terms of become, kind of, diversified towards more the regional and also moving into that side of business where we think there's a good prospect. So yes, so it didn't quite work out the way we would have hoped.

Do you see a prospect in Vietnam market?

We do, we do. But I think we are also very selective about that. Vietnam is also -- is attractive certainly from outside in, but at the same time, if not careful, we've also seen many cases where things didn't quite work out. So that's why we are super selective about this. We see some -- we still see some prospects and then we have kind of ongoing conversations. But please rest assured that if we do that, then it will only be because it is the high-quality asset consistent with our strategy.

Second question about BankX. Will it be ready for the June deadline?

So for this coming June, I would say, unlikely. I think we are targeting towards end of the year and maybe beginning of next year. So that's because that's the process, it takes -- there's some minimum time. And so by June, which is less than 2.5 months from now, we won't be able to go for this June timing.

I also heard that SCB holds 90% stake in this subsidiary. I just wonder why your partner who doesn't have higher stake, they need to put effort on this project. Are there any benefits that you will get from project as well?

So there's some structure, which I -- we're not at the point where we can fully disclose, but there's some commercial arrangement as well to incentivize and make sure that all the partners are to your point, right, I mean, everyone will need to make sure that the effort is also commensurate with the return. So there's some commercial arrangement to make sure that we also keep everyone's interest aligned, right? There's some partnership in terms of working with their team, their products and some arrangement in some forms where we could actually allow us to create alignment.

Right. My last question is about overall journey of SCB transformation, I think it's been 5 years. And back then, we think we have a high hope on the consumer loan business, that's why we set up Gen 2 businesses. But it's fair to say that after 5 years, it's not -- it did not happen in the way that we hope to. Going forward, I don't know, in the next 3 or 5 years, do you still see a prospect in domestic consumer lending market and Gen 2 will still be the key driver for the overall group?

Yes. I think we remain committed on Gen 2, which essentially, in some sense, one can generalize it as consumer finance. right, credit card and title loan business, that as you -- it is something that admittedly, we still haven't been able to deliver on what we set out to do. And -- but we see that as a positive upside that we've managed to successfully do so. And if you look at companies within that space, leaders are doing quite well, right? And there's no reason why we will not be able to do that. There are some setbacks along the way, but that's part of the business. I wish it would be easy, but it's not, right? So -- but if you ask whether we remain committed, we absolutely do, and then we'll continue to come up with ways to kind of track that business on a sustainable basis. And if we do that, then, of course, it will represent the so-called next S-curve on the profitability.

We have the next question from Harsh at JPMorgan.

Two questions. One, could you walk us through the NIM trajectory for rest of the year, please, both on cost of fund and asset yields and how you're managing the mix shift? And I have a second question on dividend.

Okay. Harsh, I think overall, while we say that we are trying to shift the port, right? But overall, the port size is huge, and it will not be that easy to shift, right? But you can see from the first quarter that we focus more on the corporate lending, and this is because of the size of the ticket, right? This one could be the easiest to kind of shift or add. And retail, we are basically saying that we will defend our position on the mortgage, right, which is one of the -- which is -- where we are the largest lender in the market. So that's does -- we will try to continue to do so. For Gen 2, overall, we think that we can have growth, although very, very selective, right? Outside AutoX, we think we can grow for the rest of the book. NIM, I think overall NIM and yield, if there is no more rate cut, we shouldn't have further negative impact on that, right? But at the same time, cost of fund is also -- would be even more -- even stickier to cut as well because of the large CASA side that we have.

Right. So exactly, Khun Munmun. so I'm trying to understand that if your yield mix shift is towards higher quality customers, more corporate, Gen 2 and 3 in line with broader bank. So not a lot of shift because AutoX is declining, CardX growth, but again, selective, especially given now tighter credit standards. Cost of fund, there's only so much you can cut. And you probably get the full quarter impact of rate cuts in second quarter. So can the NIM stay flat at 2.99% Q-on-Q? Or there is a possibility it goes down further from here?

Okay. Harsh, I think the NIM for the first quarter, particularly is a bit of a technical as well because we have the loan -- a big chunk of the loan that came in at the late of the quarter -- at quarter end, right? So that's kind of caused the NIM to slip below the target.

Sorry. So this is not the daily average NIM?

This is simple. The one that we give you here is simple.

So daily average NIM is not down 25 bps Q-on-Q.