BANKING SECTOR

Lending rates set to fall after deposit reductions

Cost of borrowing likely to decrease as banks weigh up the cost of funding, says Bangkok Bank president Chartsiri

Bank lending rates are expected to fall this quarter following recent reductions in deposit rates, Bangkok Bank president Chartsiri Sophonpanich said recently.

"Banks that earlier decreased their deposit rates will assess the cost of funding before making a decision on lending-rate cuts," he said.

Commercial banks are expected to lower their rates, the Bank of Thailand having reduced its policy rate by about 25 basis points to 4.75 per cent last week.

JPMorgan and Standard Chartered said in separate reports that the central bank was expected to cut its one-day repo benchmark twice more by a total of 50 basis points to 4.25 per cent over the course of its next three meetings.

Currently, the minimum lending rate (MLR) of Bangkok Bank, the country's largest bank, stands at 7.50 per cent per year, which is lower than other large banks. The MLR of Krung Thai Bank, Siam Commercial Bank (SCB) and Kasikornbank is quoted at 7.75

per cent.

Bangkok Bank's minimum overdraft rate is 7.75 per cent, while the other three quote 8 per cent. Its minimum retail rate is 8 per cent, against the 8.25 per cent of the other three big players.

In addition, Chartsiri said Bangkok Bank would keep its deposit rates unchanged this week because some of its rates are already lower than other banks. However, the bank's fixed-deposit rates for 24 and 36 months are higher than the others.

He said the bank's liquidity remained at a satisfactory level.

Bangkok Bank will closely monitor the market environment before considering a movement on rates next week, he added.

SCB, Kasikornbank, TMB Bank and Bank of Ayudhya have reduced their long-term fixed-deposit rates by 25 to 50 basis points recently, while Bangkok Bank and Krung Thai Bank's rates remain unchanged.

Krung Thai Bank president Apisak Tantivorawong said the bank would also consider a rate adjustment next week, taking into account market competition and liquidity.

Apisak was appointed on Wednesday as the Thai Bankers Association's new chairman, replacing Khunying Jada Wattanasiritham, SCB's president and CEO, as her term at the helm of the Kingdom's fourth-largest bank ends this month.

Somruedi Banchongduang

Thailand News
The Nation Thailand
Friday January 26, 2007