LH Bank takes loan service upcountry

President Sasithorn Pongsathorn said that after upgrading to a commercial bank, LH Bank could expand its business outside Bangkok to serve customers upcountry. Moreover, its strong capital base enables it to begin lending to corporate customers.
The corporate-loan portfolio this year is expected to reach 10 per cent of the bank’s total lending, while loans to small and medium-sized enterprises will rise to 50 per cent from 46 per cent and retail loans will be decreased to 40 per cent from 54 per cent last year. Overall lending this year is expected to increase to Bt70 billion from Bt54.95 billion.
LH Bank will open 17 new branches, mostly in the provinces. The total number of branches by the end of the year will be 61.
Branches will mainly be located in economic and community areas to provide commercial lending and mortgages, and to mobilise deposits.
She said the funding portfolio this year might not change significantly because the bank was maintaining bills of exchange (B/Es) even though that product will have to contribute a premium of 0.46 per cent to the central bank.
LH Bank’s customer base is individuals who deposit no less than Bt1 million, above the deposit-protection cap to be imposed in August.
Of total deposits of Bt58.57 billion, B/Es account for 62 per cent, while 38 per cent are fixed deposits and current accounts and saving accounts.
The cost of funding from B/Es is not higher than from deposits because smaller banks earlier used pricing strategy to chase funds. There is not much difference between the coupon rates of bills of exchange and fixed deposits, and customers prefer B/Es for their convenience, Sasithorn said.
LH Bank enjoyed outstanding operating results in 2011 in terms of asset and loan growth of 29.3 per cent, while net profit grew 25 per cent to Bt525 million.
Meanwhile, its low rate of non-performing loans, 1.6 per cent, is attractive to foreign bank partners.