Land and Houses Bank (LH Bank), the financial arm of property developer Land and Houses Plc (LH), has set an aggressive target to double new mortgages to 8 billion baht next year after a flat showing anticipated this year.
The bank is drafting its 2020 business plan, aiming for 8 billion baht in new mortgages, said newly appointed president Chompoonoot Pathomporn. The lending growth is based on the assumption that mortgage demand will return to normal next year.
The bank forecasts new mortgages of 4-5 billion baht this year, the same level as last year, Mrs Chompoonoot said.
The Bank of Thailand's tougher loan-to-value (LTV) requirements, enforced since April 1, have dented home loan demand, she said.
LH Bank has slowed its housing loan issuance over the past few years to comply with its asset diversification policy. The bank has also adjusted its housing loan business strategy in preparation for both higher risk and tougher LTV rules.
"We've shifted focus to upper-income homebuyers with a minimum house price of 5 million baht, up from 3 million earlier," Mrs Chompoonoot said. "With the strategy, we can better control asset quality."
LH Bank's total mortgage loans stood at 21.4 billion baht at the end of June, down 6.4% from the end of last year.
For next year, the small bank plans to focus on mid-sized corporate loans because of strong demand and better yields in the segment despite intensifying competition.
LH Bank defines mid-sized corporate firms as those with annual sales in the range of 500 million to 1 billion baht.
Mrs Chompoonoot said the bank will pay more attention to fee-based income next year, particularly in trade finance, which is the main expertise of one of the bank's major shareholders, Taiwan-based CTBC.
Although Thai exports have been hurt by the trade tension between the US and China, outbound merchandise shipments remain the key engine driving the Thai economy and business opportunities remain open, she said.
The bank plans to concentrate on advisory services, especially for mass affluent customers, while the elderly market is another key segment as the country's population ages, according to Mrs Chompoonoot.