Grab, Southeast Asia’s biggest ride-hailing-to-food delivery group, is looking at breakeven for its food delivery services in the first half of 2023, its top executive said.

“We are looking at breakeven for food deliveries in the first half of 2023. In mobility, we have industry-best margins at 12 per cent last year. At the group level, we aren’t providing guidance yet (for profitability),” Grab Co-founder and Group Chief Executive Officer Anthony Tan said in an interview with The Straits Times on Sunday.

He is also working with central banks in Malaysia and Singapore to launch Grab’s digital bank this year, according to the Singapore-based media.

Grab expects the digital bank to help drive its cost of funds down, which could, along with the use of deep technology, help cut its cost of service. Grab has partnered with Singaporean telecommunications conglomerate Singtel for the Singapore digital bank, which is likely to be called GXS, according to the report.

Malaysia Central Bank has yet to announce the results of the digital banking license application but the Grab-Singtel consortium is seen as one of the forerunners to win a license. Grab operates e-wallet GrabPay in Malaysia through its super app and has started to offer FinTech products such as ‘Buy Now Pay Later’ options to its users.
Last month, Singapore-headquartered Grab posted a loss of $1.1 billion in the fourth quarter of 2021, as its revenue tumbled 44 percent year-on-year to $122 million on heavy incentive spending.

While critics pointed out that the increase in merchant activity Grab enjoyed was achieved merely through massive incentives such as discounts and driver commissions, Tan pointed to the massive total addressable market (TAM) to justify these outlays in the interview. Groceries are estimated to be a $475 billion opportunity in Southeast Asia and only 1 per cent of that is transacted online; ride-hailing is at 5 per cent and food deliveries at 12 per cent. The technology stack for the digital bank is ready, according to him.

“We are at the tip of massive growth. Making sure this is done in a judicious way is part of our business strategy,” he was quoted as saying.

Grab operates across almost 500 cities in eight countries in Southeast Asia. Its operations include ride-hailing, food and grocery delivery services, digital payments, lending, insurance, wealth management among others. In Southeast Asia, Grab competes with Jakarta-based GoTo Group, which also adopts the super app strategy and offers ride-hailing, digital payments, food delivery services. Grab debuted on the NASDAQ stock exchange in December last year through a merger with a special purpose acquisition company. GoTo plans to raise $1.1 billion in its initial public offering (IPO) on the local stock exchange.

The members of the Executive Committee of US-listed super app Grab Holdings Ltd including Co-Founders Anthony Tan and Hooi Ling Tan, have extended the term of the lock-up period of their shares in the company for a year, a regulatory filing on March 14 showed.

The extension follows a sharp decline in Grab’s share price after the company reported a wider net loss earlier in the month. The Straits Times also earlier reported that Grab could face class action lawsuits, with several US law firms calling for shareholders to contact them to investigate claims on their behalf. The mounting of such investigations comes after its sharp decline in share price following the announcement of its final quarter financial results in 2021.

Grab’s top execs extend stock lock-up period as share price tumbles