Land and Houses Bank (LH Bank) is putting more focus on Taiwanese businesses in Thailand, aiming for 70% loan growth in this corporate customer segment in 2022.
The ambitious target comes amid a growing belief that Thailand could benefit from greater business opportunities as a result of tensions over Taiwan if manufacturers relocate their factories.
Taiwanese businesses in Thailand, including those connected to lending, trade finance, foreign exchange, and other Taiwan-related financial services, have been growing strongly. Amid geopolitical tension between the US and China over the island, Taiwanese business operators with a production base in China could relocate to Asean member states, particularly Vietnam and Thailand, said Shih Jiing-Fuh, president of LH Financial Group (LHFG), a holding company of LH Bank.
In this scenario, Thailand and LH Bank would enjoy more business opportunities with Taiwanese customers. There are currently around 200,000 Taiwanese people in Thailand, of which around 5,000 are business operators.
The bank aims to grow its market share of Taiwanese businesses in Thailand, targeting annual growth of around 10% for the next three years.
CTBC Bank, Taiwan’s largest privately-owned bank, is LHFG’s major shareholder.
For the first half of 2022, the bank’s Taiwanese businesses booked strong loan growth of 49.8%, while trade finance grew by 68% from the end of 2021.
The positive loan expansion from Taiwanese customers and Taiwan- and foreign exchange-related businesses is in line with Thailand’s export and import growth.
Chompoonoot Pathomporn, LH Bank chief executive and president, said that due to the recovering Thai economy, the bank might revise up its loan growth target for the full year from the current 6-7% after booking satisfactory growth in the first half of 2022.
In particular, the retail loan growth rate has a high chance of being adjusted. For corporate lending, the bank will take more time monitoring the economic recovery trend before making a decision on loan growth target adjustments, she added.
“The tourism sector has been showing improvements, and it will boost the country’s economic activities. In this scenario, the Thai economy will further rebound and benefit the bank’s loan expansion for the remainder of the year,” Ms Chompoonoot said.
For the first half of 2022, LH Bank booked total loan growth of 8.9% from the end of last year, mainly contributed by retail lending, which posted strong growth of 18.3%. Commercial lending grew by 7.2%.
Ms Chompoonoot said the bank would set additional loan loss reserves in preparation for economic uncertainties and external risks, particularly the ongoing Russia-Ukraine war. The bank aims to maintain its coverage ratio at around 200%.
The bank set aside provisions for loan losses of around 1.3 billion baht in the second quarter of this year, with the coverage ratio at 196%.
The bank’s non-performing loan ratio declined from 2.44% at the end of 2021 to 2.40% as of June this year. With business expansion, the bank expects NPLs to increase to 2.5-2.6% this year, which is seen as an acceptable level.