Land and Houses Bank (LH Bank), the financial arm of property developer Land and Houses Plc (LH), aims to expand its loan portfolio with a focus on high-yield products while maintaining a balanced and sustainable loan portfolio in the long term.
The bank is prioritising small and medium-sized enterprise (SMEs) and mortgage loans this year despite challenges posed by Thailand's weak economy and rising household debt.
LH Bank set ambitious growth targets for these segments, aiming for a 16% increase in SME loans and a 20% gain in mortgages this year.
According to Shih Jiing-Fuh, president of LH Financial Group (LHFG), the holding company of LH Bank, the SME sector holds strong long-term growth potential, and LH Bank plans to adopt a selective approach to financing.
Thai SMEs have high potential to grow over the long term and the bank wants to offer selective financing to these businesses, he said.
LH Bank focuses on mid- to large-sized SMEs with sales of 50-500 million baht annually, as it projects roughly 90% of the segment is expected to grow sustainably over the long term.
"Despite relatively high risks in the SME sector, we remain confident in its long-term growth potential. Our tailored product programmes are designed to meet the needs of local SMEs while maintaining sound risk management," said Mr Shih.
As a small bank, LH Bank's SME loan portfolio remains modest compared to larger local banks. While the bank has set aggressive growth targets for this segment, new lending is projected to reach around 50 billion baht.
For mortgages, LH Bank is focusing on middle- to upper-income homebuyers, targeting properties priced between 3 million and 50 million baht per unit.
In addition, the expected easing of loan-to-value regulations could further support mortgage growth in the upper-income segment.
Given its SME and mortgage expansion plan, the bank aims to balance and diversify its overall loan portfolio while targeting higher yields in the long term, said Mr Shih.
Corporate loans account for 27% of LH Bank's total loan portfolio, while conglomerate loans represent 22%. SME and retail loans each make up 23%, with Taiwanese loans comprising the remaining 5%.
Challenges such as the rollover of non-investment-grade bonds pose risks to the overall corporate lending market, he said.
According to Mr Shih, the bank targets total loan growth of 7-8% this year, building on last year's 8.3% increase, which brought the total loan portfolio to 289 billion baht.
With an aggressive loan expansion plan for this year, the bank anticipates a slight increase in its non-performing loan ratio from 2.3% last year to 3% this year.
