In recent years, the weak economy has limited income growth for businesses and households, with some even experiencing declines. This naturally leads banks to reduce lending to these groups, reflected in the commercial banking system's loan figures for 2025, which contracted by 1.1% year-on-year, marking six consecutive quarters of decline. The hardest hit sector is SME loans, which have shrunk by 4.1% for 14 straight quarters.
However, since lending is a bank’s core business, this presents an opportunity for smaller banks to expand their market share, as noted by Qi Qing-fu, Chief Executive Officer and Managing Director of Land and Houses Bank, or LH Bank. He explained that although the bank currently holds a 1.6% market share and remains a small bank, this is an "advantage" enabling quick adaptation and more precise targeting of niche customers compared to larger banks. LH Bank aims to sustain 10-12% growth in 2026 despite a potentially slowing loan market.
Specifically, the SME loan target for 2026 is set at 6 billion baht, doubling from 3 billion baht in 2025. Although SME lending carries higher risks and requires greater provisions, the bank will continue to focus on growth sectors like electronics, AI, and rural SMEs, while applying strict customer screening. The bank emphasizes it will not compete by cutting loan interest rates but will focus on diverse service offerings.
Therefore, the 10-12% loan growth target for 2026 is pursued with caution to ensure sustainable expansion. The bank will also leverage technology to analyze customer behavior and needs. Personal loans (Ploan) will continue with risk-based pricing strategies. Across all loan types, the bank emphasizes cross-selling to provide one-stop service for all customer segments.
Besides expanding business loans and supporting Green Finance, LH Bank is accelerating fee income growth from Wealth Management, Trade Finance, and foreign exchange (FX). It anticipates that any additional transaction fee regulations by the Bank of Thailand will have limited impact due to its diversified non-interest income base.
Regarding the clearer emergence of Virtual Banks expected in Q2 2026, the bank views this positively for underserved consumers. However, LH Bank expects limited impact on itself since its customer base mainly consists of businesses and wealthy clients requiring advisory and complex management services.
On the risk of rising non-performing loans (NPLs), the bank expects to keep NPLs below 3%. While acknowledging that loan loss provisions (ECL) may increase with portfolio growth, it remains confident that returns will justify the associated costs.
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