Land and Houses Bank (LH Bank), a unit under Land and Houses Financial Group Plc (LHFG), continues to decelerate mortgage, small and medium-sized enterprise (SME) and retail loan growth this year amid several uncertainties.
The small bank's mortgage lending slowdown will continue in 2019 because signs of risk in the property market, particularly oversupply of condos, have been spotted, said president and chief executive Sasitorn Pongsathorn.
The bank has slowed its housing loan extensions since the beginning of last year, even before the Bank of Thailand amended regulations to tighten loan-to-value requirements. Those rules will take effect in April.
SME fragility and the impact of the International Financial Reporting Standard Version 9, to be implemented in 2020, are likely to dampen asset quality in the business segment.
LH Bank has restructured its loan portfolio over the past few years by focusing on wholesale banking business to reduce loan portfolio concentration.
The bank aims for 6-8% lending growth this year, largely contributed by corporate banking business, Mrs Sasitorn said.
With the strategy, corporate loans are the only segment that recorded aggressive growth of 15.6% last year and helped drive the bank's loans outstanding growth of 5.1% to 182.14 billion baht.
Wholesale loans are now the bank's largest portion at 75.2% of the total loan portfolio.
LH Bank saw its SME and retail loans shrink 19.3% and 15.8% respectively last year.
The bank's SME loans amounted to 20.7 billion baht, representing 11% of total loans, and retail loans stood at 24.6 billion, of which 22.9 billion was mortgages, which fell by 16.3% in 2018.
Mrs Sasitorn said the bank targets a non-performing loan (NPL) ratio of no more than 2% this year, compared with 1.93% now, and aims to keep coverage ratio at the existing level of 110%.
Meanwhile, executive vice-president Chintana Klaisuwan said mid-corporate companies with average annual sales of 1 billion baht and bigger SMEs are the bank's targets this year.
LH Bank aims for flat growth in mortgages outstanding this year, though it expects to extend 4 billion baht worth of housing loans, she said.
The bank has managed to lower its average debt service ratio from 80% to 60% since the beginning of this year, Ms Chintana said.