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Navigating the world of digital banking must often feel like walking on a tightrope for both operators and regulators.
On the one hand, I think most would agree that the financial sector could do with some innovation. But on the other side of the coin (pun intended), regulation is needed to protect consumers and institutions alike.
Today’s featured story looks at Malaysian digital bank Boost Bank, which may soon find itself on the wrong side of that tightrope due to some bad debts.
Today we look at:
- Boost’s bad loan battle
- The hurdles holding back China’s chipmaking industry
- Other newsy highlights such as the deal showing just how far Indian hospitality firm Oyo’s valuation has dropped and the crypto world cheering for Trump.
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Boost in hot water?
Image credit: Timmy Loen
Boost Bank was one of the first digital banks to secure a license from Malaysia’s central bank in 2022, but it could soon find itself under the regulatory microscope due to bad debts.
Boost Holdings, which owns 60% of the digital bank, is facing millions in bad debt, sources tell Tech in Asia.
- Court drama: A Boost Holdings subsidiary, Axiata Digital Credit (ADC), has US$5.9 million in bad debt, according to its 2023 annual report. Part of the debt comes from two Malaysian companies that ADC is now suing, seeking damages for fraud, breach of fiduciary duty, and other charges.
- Above average: The industry benchmark for non-performing loans (NPLs) in Malaysia is 4% – a figure ADC likely exceeds given that its bad debt (a subset of NPLs) is at 12% against all loans on the firm’s books. While ADC itself is not a bank, sources have expressed concerns about what this could mean for its parent company Boost, which is running its own digital bank. Boost says it has taken measures to bring its asset quality close to its historical average.
- Unicorn hunting: Meanwhile, Malaysian telco major Axiata Group is considering divesting a significant portion of its stake in Boost Holdings, sources tell Tech in Asia. The goal seems to be securing fresh funding for Boost as it attempts to reach unicorn status.
Read more: Boost battles bad loans as potential stake sale looms
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