LH Bank focuses on loan quality
Land and Houses Bank (LH Bank) continues to slow its mortgage and small- and medium-sized enterprise (SME) lending in a bid to maintain asset quality.
LH Bank expects 2018 housing loans to be unchanged from last year’s 29.1 billion baht. The bank will seek board approval to shift its mortgage loan target to upperincome earners who buy homes priced at 4 million baht or more, said senior executive vice-president for credit development and risk management sector, Sutharntip Phisitbuntoon.
A small lender with total assets of 233 billion baht, LH Bank has cooled its mortgage loan growth over the past few years because of rising non-performing loans (NPLs) in the business segment and surging household debt.
The bank’s housing loans contracted 6.2% last year, while bad-debt ratio was 2.1% of total mortgages outstanding — exceeding the bank’s gross NPL ratio of 1.88% of total loan portfolio.
Mortgage borrowers with a home price of 2-3 million baht are the bank’s focus at the moment, but distressed debt in the segment is rising, Mrs Sutharntip said.
LH Bank will wait until the situation improves before resuming acceleration of housing loan growth, she said.
The bank also plans to decelerate SME loans this year on concerns over asset quality. Last year saw marginal SME loan growth of 1% to 24.25 billion baht.
Small companies, particularly selfoperating owners, are the main contributor to NPLs.
“We put a focus on corporate loans this year,” Mrs Sutharntip said. “Despite the narrower margin of the wholesale business, it has lower risk. Overall it may cut the bank’s net interest margin, so we need to control financial costs to maintain our profit.”
Separately, Chutamas Sombunyaviroj, first executive vice-president for the commercial banking marketing group at LH Bank, said the bank aims to reduce financial costs by 0.5-0.8 percentage points this year from the current level of 1.93%.
Focusing on payroll customers for expansion of current and savings deposits is a key strategy to slim financial costs.
LH Bank’s deposits outstanding totalled 143.74 billion baht at the end of last year, with 72.56 billion or 50.48% in savings accounts.
The bank’s savings deposits grew by 11.4% as total deposits fell by 3.9% last year.