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LH Bank to grow its provincial base

Feb 07. 2013
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By Sucheera Pinijparakarn
The Na

Land and Houses Bank is broadening its customer base in major cities and penetrating growth industries as part of its plan to attract foreign investors.


“Our matured shape must consist of many factors to assure a win-win when we acquire partners,” the bank’s president Sasithorn Pongsathorn said yesterday.
After upgrading to a commercial bank in December 2010 and listing on the Stock Exchange of Thailand in 2011, the bank’ assets showed steady growth, especially loans to businesses. Mortgages are its main business.
For organic growth, the bank has shifted towards corporate loans, especially syndicated loans and lending to small and medium-sized enterprises upcountry. Its loan portfolio plumped up last year by 56.7 per cent to Bt86.25 billion. Corporate loans advanced by 191.8 per cent, SME loans by 73.8 per cent and home loans by 14.9 per cent.
Corporate loans increased to 25 per cent of the portfolio from 13 per cent and SME loans to 34 per cent from 31 per cent, while housing loans fell to 41 per cent from 56 per cent.
Matured performance means a portfolio balanced at 30:30:30. 
LH Bank is still in talks with a financial house in Asia.
The bank can mobilise funds in tandem with loan growth and maintain its cost of funds and the productivity of its assets in line with its peer group. Even though last year it furiously expanded its branch network, its cost-to-income ratio stayed at 56 per cent, better than 60.5 per cent for mid-sized banks, Sasithorn said.
Its strategy remains unchanged from last year, but the direction is much clearer that the bank has to strengthen organic growth from retail and SME customers in the provinces and corporate loans in high potential industries, she said. 
Synergy with LH Bank’s shareholders will also be clearer.
The target for loan growth is at least 25 per cent and for portfolio proportioning at 30 per cent for corporate loans, 35 per cent for retail loans and 35 per cent for SME loans. 
LH Bank will focus on upcountry branch expansion in high-opportunity cities. It will cross-sell products to corporate and privilege banking customers in cooperation with group firms such as Land and Houses Development, Q House, Home Product Centre, Centre Point, Terminal 21 and Fashion Island.
“We’re confident of diversifying our customer base in the provinces after succeeding in scoring with mortgage customers in Bangkok over four years,” she said. 
The bank will promote more cross-selling to provincial customers to boost fee income.
Logistics warehouses, trading services, the food industry and developers are the key drivers of SME loans. Corporate loans will come from joining loan syndications with large banks, she said. It will focus on industries that are being supported by government projects as well as the energy and infrastructure industries, which are quality borrowers. 
To support organic growth, LH Bank has developed multiple-channel integration, which will help cross-selling.
The bank’s data warehouse was completed last year to prepare for the integration this year. The bank will launch mobile banking, telephone banking and ICAS (imaged cheque clearing system) next quarter and debit cards in the following quarter, Sasithorn said.

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