The digital bank is on track to be top- and bottom-line profitable by the end of 2025, says founder Greg Krasnov.

Tonik Digital Bank, founded by Greg Krasnov, is on track to become profitable by the end of 2025, a little more than four years after launch. The Singapore-based but Philippines-focused bank is not just enjoying growth but has adopted a lending-first business model, in a market where others have prioritized payments, and where the biggest success stories in addressing the unbanked have been e-wallets.

Tonik’s initial test was simple: how quickly could it attract retail deposits and build out a loan book? The answer came swiftly. By its third year, Tonik had amassed $150 million in deposits, so quickly, in fact, that the bank had to put the brakes on its deposit-gathering efforts.

The bank had become overfunded relative to its loan book, with a significant portion of funds sitting idle at Bangko Sentral ng Pilipinas, the central bank – a costly proposition when interest rates declined. Tonik cut its deposit base to around $100 million. Today, Tonik boasts a loan-to-deposit ratio of 65 percent, the best among digital banks in the Philippines, says Krasnov.

But gathering deposits is only half the battle. For Tonik, the real test is making profitable loans to a segment that is largely new to formal borrowing, banking, and credit. “That’s 90 percent of Filipinos,” Krasnov told DigFin, pointing to a $100 billion asset class that remains largely untapped.

The challenge, however, is formidable.

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