LH Bank reveals strategy for mid-sized status by 2030

Land and Houses Bank (LH Bank), the financial subsidiary of property giant Land and Houses Plc (LH), unveils its ambitious plan to become a mid-sized bank by 2030. The bank’s strategy is founded on robust loan growth and an increasing income stream.

LH Bank’s five-year business strategy involves a comprehensive restructuring of its loan portfolio, aimed at driving loan expansion and enhancing returns, as shared by Shih Jiing-Fuh, president of the LH Financial Group (LHFG), the parent company of LH Bank, reported Bangkok Post.

Shih Jiing-Fuh expressed that this strategy will bolster the bank’s asset size, propelling it to achieve its goal of becoming a mid-sized bank.

In pursuit of expanding its asset size, LH Bank takes a more organic approach. Rather than relying on mergers and acquisitions, the bank’s strategy is centred on fostering growth from within, revealed Shih.

The bank’s medium-term plans are primarily focused on digital banking and forging strategic partnerships, as per the president.

As per the latest figures from December 2023, LH Bank’s total assets stood at a staggering 323 billion baht (US$9 billion). However, the bank has chosen to keep its total asset target for the upcoming five years under wraps.

Over the next five years, Shih revealed that the bank is set to broaden its multinational loan portfolio. The focus will be mainly on Taiwanese customers, to make up 70% of total outstanding loans.

Loan composition

Additionally, LH Bank plans to increase the proportion of small and medium-sized enterprises (SME) and retail loans to a collective 20% while reducing the corporate loan ratio to 10%.

As of December 2023, conglomerate and corporate loans made up 118 billion baht (US$3.29 billion) of the portfolio, standing at 44% of the bank’s total outstanding loans, equivalent to 267 billion baht (US$7.45 billion).

The share of commercial and SME loans was 36%, equivalent to 96.4 billion baht (US$2.69 billion), while retail loans accounted for 20%, amounting to 53.4 billion (US$1.49 billion), said Shih.

“Taiwanese banking business has posted positive growth, aligning with higher foreign direct investment, partly driven by Taiwanese investors.

“We expect Taiwanese loan growth of 5 billion baht (US$139 million) this year.”

Taiwan’s CTBC Bank holds a significant 46.61% stake in LHFG.

LH Bank has set its sights on achieving total loan growth of 8-10% this year, with a more ambitious target for digital loan growth set at 10-15%.

In terms of digital banking development, the bank expects to increase digital loans to 1 billion baht (US$27.9 billion) this year, a significant leap from around 400 million baht (US$11 million) the previous year.

Despite these ambitious targets, LH Bank remains committed to managing risk prudently, aiming to limit the non-performing loan (NPL) ratio to 3% this year.

Shih confirmed that the bank is prepared for a slight increase in NPLs from 2.7% last year due to its focus on SME and retail loan growth this year.

LH Bank expects to maintain a steady net interest margin of 2.5-2.6% this year, building on the 2.53% margin achieved in 2023, he added.