Land and Houses Bank (LH Bank) has exercised caution in trimming its 2013 loan growth target to 20-25% from 35% after a wave of signs pointing to a second-half slowdown and swelling household debt.
President Sasitorn Phongsathorn said LH Bank has tightened its scrutiny of loan approvals, especially for mortgages, which make up 33% of the bank's outstanding loans.
"The revised loan target is in response to many factors such as the US's quantitative easing tapering, China's economic slowdown and increasing household debt," she said, adding that LH Bank plans to keep non-performing loans (NPLs) below 2% of total credit to avoid risk.
LH Bank's lending in the first six months rose by 11.2% from the end of last year to 98.7 billion baht.
During the January-June period, the bank delivered a 52.8% year-on-year rise in net profit to 503 million baht on higher net interest and fee revenue. Total assets were 135 billion baht.
Mrs Sasitorn said LH Bank is in talks with an Asian bank on a partnership to enhance the bank's capability in international trading and microfinance.
The potential partner's name will be revealed by year-end.
Rutt Phanijphand, chairman of the executive directors, said LH Bank is in no rush to reach an agreement before the Asean Economic Community (AEC) starts in 2016.
"No need to hurry, as the supply of purely Thai-owned banks is limited," he said. "Most banks in Thailand are owned by foreign banks. The AEC may make us more attractive to foreign institutions."
Last month, Bank of Tokyo-Mitsubishi UFJ, Japan's biggest lender by assets, announced it will acquire up to a 75% stake in Bank of Ayudhya, Thailand's fifth-largest bank by assets, in a deal worth 170 billion baht. The imminent AEC was cited as a reason for the acquisition.
Mrs Sasitorn said LH Bank is looking for synergy that will help it to grow by at least 20-25% in total assets. "We're just a domestic bank right now."
"And the future is impossible to predict, as it depends on whether the partner will lead us to become a regional or a universal bank."
Meanwhile, Kiatnakin Bank expects growth in hire purchase loans, its core business, of 12-15% this year, down from 26% last year. The bank, however, is keeping its lending growth target at 19%.
The hire purchase business contributed 7.82 billion baht in revenue, representing 67% of Kiatnakin's total in the first half, with SME and property loans making up the rest. Hire purchase loans grew 5.8% in the first half, while SME and property loans rose by 17.4% and 25.8%.
Apinant Klewpatinond, president and chairman for commercial banking at the Kiatnakin Phatra Financial Group, said the bank is tightening approvals for all loan types in the second half.
He said NPLs as of June 30 stood at 3.5%, in line with the target range of 3% to 3.5% but up from 3.3% in the first quarter. It sets aside a loan-loss reserve of 300-400 million baht each quarter.
Kiatnakin's first-half revenue was 11.6 billion baht _ 67% from interest revenue and the rest from fees and services.
The bank posted a net profit of 2.4 billion baht, 49% of which was from capital market business.
Kiatnakin had total assets of 258 billion baht and loans of 183 billion.
Shares of LHBANK closed on the Stock Exchange of Thailand at 1.39 baht yesterday, down two satang, in trade worth 22.63 million baht.
Kiatnakin changed its stock symbol to KKP from KK, effective yesterday. The shares closed up 1.75 baht to 44.75 baht in trade worth 312.72 million baht.
About the author
- Writer: Darana Chudasri
Position: Business Reporter