Hong Kong’s digital banks, operating for over five years, continue to face losses, making business consolidation or parent company support increasingly urgent.
Mox Bank, the largest loss-maker among the city’s eight digital banks in the first half of last year, has acquired a US$1 billion (over HK$7.8 billion) personal instalment loan portfolio from its parent, Standard Chartered Hong Kong.
The acquisition is expected to help Mox Bank break even in the first half of this year and move closer to profitability.
According to the Hong Kong Economic Journal, this follows a precedent in June 2021 when WeLab Bank received the WeLend online lending platform from parent WeLab Group, expanding its loan portfolio and turning the bank profitable.
Analysts say other digital banks with strong parent companies may pursue similar asset transfers to accelerate profitability.
Standard Chartered confirmed that it is transferring the portfolio on an independent transaction basis, aligning the move with Mox Bank’s growth strategy. The bank will notify customers before completing the transaction.
Mox Bank also confirmed the acquisition, noting it will consolidate its loan portfolio and support ongoing prudent development.
Fang Haiyun, Partner at KPMG China Hong Kong, said:
“Hong Kong digital banks focus mainly on retail and SME services, sectors sensitive to economic cycles. As shareholders recognise longer timelines to profitability, transfers of existing loans to digital banks can relieve short-term impaired loan pressure and meet capital requirements.”
The transferred portfolio, completed at the end of last year, will take effect in Mox Bank’s first-half results.
Repayments should reduce the outstanding balance by half within a year, leaving the remaining loans with an average term of five to six years.
Other unsecured loans, like credit card receivables, remain with Standard Chartered.
Standard Chartered said the transfer will minimally affect existing customer terms while offering more flexible digital servicing.
Last year, Mox Bank posted a net loss of HK$181 million in the first half, the largest among peers, despite cutting expenses and seeing three senior directors leave under a restructuring last October.
Featured image credit: Standard Chartered
