Land and House Bank (LH Bank) aims for 10 billion baht in trade finance lending this year after the Bank of Thailand approved the bank's new service.
Of the 10 billion baht, 3-5 billion is expected to be extended this quarter, said president and chief executive Sasitorn Pongsathorn.
Even though the central bank gave LH Bank permission to offer trade finance loans last week, the bank has already acquired 42 customers, she said.
The new business will support fee-based income in the long run, said Ms Sasitorn.
Fee income represents around 10% of total revenue. LH Bank has continued to extend corporate loans and slow mortgage lending to increase asset size in a sustainable manner.
The bank has 240 billion baht in assets, 60-70% of which comes from big corporate companies, while housing loans make up 14%, down from 30-35% in the past.
LH Bank's trade finance offers a full array of services, including importing letters of credit, import bills for collection, trust receipts, shipping guarantees, outward remittances, export letters of credit, export bills for collection, assignment of proceeds, packing credits, export bill financing, inward remittances, letters of guarantee and standby letters of credit.
Taiwan-based major shareholder CTBC Bank's trade finance expertise could facilitate LH Bank's business growth. CTBC's total assets amount to 4.2 trillion baht, of which 60% comes from international business. The Taiwanese bank's global network has 111 branches in 14 countries across the world.
In Taiwan, CTBC's market share in trade finance is 4-5% and foreign exchange service is at 10%.
Frank Shih, CTBC Bank's executive vice-president for global operations, said strong networks, service quality, and competitive pricing will support LH Bank's competitiveness, despite being a new player in the Thai market.
"While the trade war between the US and China is a key challenge for global economy, the region will benefit immensely as foreign investors relocate production bases, especially Thailand and Vietnam," he said.
CTBC would also refer customers who want to expand operations in Thailand to LH Bank, he said.
Thailand is a main investment destination for foreign investors, particularly those from the US, Chinese, Singaporean, and Taiwanese investing in manufacturing, energy, auto parts, and electronic part sectors.
