Thai Banks To Review Interest Rates

[george]

Thai banks to review interest rates

BANGKOK: -- Senior Thai bankers believe it is not necessary to raise Thailand’s domestic interest rates because of the high liquidity in the country's banking system. But believe banks may have to review the rates during around the middle of the year.

The liquidity in the banking system is now around 400 billion baht, down from more than 500 billion baht in late 2004, according to Prasarn Trairatworakul, president of Kasikorn Bank.

This is sufficient to make any increase in interest rates on savings and deposit accounts unnecessary, he said.

But banks may have to review these rates around the middle of the year.

Experts believe lending will grow by around 7-8 % this year, slightly less than last year because of the economic slowdown and concerns about the violence in the South, said Mr. Prasarn.

The liquidity in the banking system is still high because of impressive export sales and foreign capital inflows into the equity market, according to Khunying Jada Watanasirithum, president of Siam Commercial Bank.

The current interest rates are quite balanced because of public and private investment, she said.

Several planned mega-projects by the government this year may lower liquidity, though not significantly.

Interest rates on bank deposits is now lower than lending rates though liquidity has started to decline, said Chamlong Atikul, president of Bank of Ayudhya.

The commercial banks may have to reconsider interest rates around the middle of the year in view of any increase in the US Federal Reserve rate and the Bank of Thailand’s monetary policy.

--TNA 2005-02-20

[RDN]

Shame! I was hoping for a rise to 0.015% p/a on my savings account....

[george]

Bankers see no need to raise interest rates for now

BANGKOK: -- There is no need to raise interest rates for now since the liquidity in the banking system remains very excessive, but a review on the interest trend is needed during the second and third quarters, according to leading bankers.

Prasarn Trairattanaworakul, President of Kasikornbank Plc, said although the liquidity in the system dropped to around 400 billion baht from more than 500 billion late last year, it should be considered considerably excessive.

As a result, he saw no need for now to increase deposit rates. Possible increase might be raised for discussion in late second quarter or early third quarter.

He projected loans would grow 7-8% this year, which is slower pace than that of last year, while deposits would expand 4-5%.

The declined loan growth was attributable to the economic slowdown and mounting concern on the violence in the deep South.

Chada Wattanasiritham, President of Siam Commercial Bank Plc, said the liquidity in the system remained high because the country’s export continued to grow and foreign capital overwhelmed the Thai stock market.

She said loans continued to grow along with the economic expansion and the increase in private and state investment, resulting in current interest rates being in equilibrium.

However, she forecast the liquidity in the system would drop to a certain extent since it is believed the government would be able to mobilize funds by borrowing and securitization to finance the state investment in large basic infrastructure projects.

Chamlong Atikul, President of Bank of Ayudhya, said deposits had now grown at a lower rate than loans, signaling the liquidity had begun to decline.

He believed commercial banks would review the interest trend in the second and third quarter period by taking into account the US interest hike and the Bank of Thailand’s interest policy.

--TNA 2005-02-21