Commercial Banks Ready To Up Interest Rates

Commercial banks ready to up interest rates

BANGKOK: – Thai commercial banks are ready to increase interest rates if the Bank of Thailand (BoT) hikes its 14-day repurchase rate (RP), expected at 25 basis points in August, while Siam Commercial Bank (SCB) will not raise its rates at least in the immediate future due to its high liquidity.

Jada Wattanasiritham, president of SCB, said commercial banks were awaiting on a possible increase of the central bank's 14-day RP rate first before hiking their rates which would be almost the same level of the increase by the central bank. On the part of SCB, it is still not necessasry to raise the rates because it still has high liquidity with deposits of over 600 billion baht and accumulative loans of about 500 billion baht.

She said if the central bank did not raise its rate it would make interest spread between Thai banks and banks in overseas to become wider and this would cause capital outflows in short-term. Presently, inter-bank rates and the RP rate are much lower than rates imposed in overseas.

Loans granted by SCB during the first half of 2004 rose between 8-10% from the end of 2003 while deposits advanced about 15% on the back of increased investment by the private sector, she added.

-- TNA 2004-08-01