Thailand: Banks pledge to maintain prime lending interest rate

Local banks have announced they are maintaining the prime lending interest rate to support fragile customers amid a rising interest rate trend.

Siam Commercial Bank (SCB) and TMB Thanachart Bank (ttb) announced that they are to keep prime loan interest rates unchanged, while ttb has also increased its deposit rate for a specific deposit account.

Their moves follow the Bank of Thailand (BoT)’s policy rate hike on Aug 10 by 25 basis points to 0.75% at present from a record low of 0.50%. The rate hike last week was the first time in almost four years the central bank has raised the rate, aiming to tame the elevated level of inflation.

The banks’ prime loan rates include minimum loan rate (MLR), minimum overdraft rate (MOR), and minimum retail rate (MRR).

Piti Tantakasem, ttb’s chief executive, said in a statement the bank has maintained loan interest rates to support vulnerable customers, in line with the policy of the Thai Bankers’ Association (TBA).

The bank has also kept existing debt relief measures and a debt consolidation programme for retail loan products.

In addition, ttb has increased the deposit rate for a special deposit account, namely ttb up and up, to 1.8% per year from the maximum rate of 1.6% offered previously.

Given uneven economic recovery, the higher cost of living mainly due to the rising rate of inflation and a rising trend in interest rates, would impact some fragile customers, especially individuals and entrepreneurs operating smaller businesses.

Under this scenario, the bank’s lending rate increase would be conducted gradually to help ease the burden on customers amid the central bank’s policy rate normalisation, Mr Piti said.

Under a long-term debt restructuring programme complying with the central bank’s policy to assist pandemic-hit-borrowers, ttb has already provided financial aid to around 750,000 customers.

Moreover, the bank has offered debt consolidation programmes for mortgage and auto loans to help reduce customers’ monthly debt installments.

SCB’s chief executive Kris Chantanotoke said the bank would keep prime lending interest rates steady and it prefers to monitor economic signals and examine the data thoroughly before making a decision following the policy rate hike.

Low income household clients, small and medium-sized enterprises (SMEs) whose businesses recover slowly, are in the bank’s focus for assistance.

“We’ll closely monitor economic situations and other related-data before making a decision. The bank will help fragile clients pay debt properly and have enough liquidity to continue their business operations,” Mr Kris said.

SCB also maintains its long-term debt restructuring scheme to help clients pass through their difficulty through several methods.

Pipit Aneknithi, co-president of Kasikornbank (KBank), said the bank has continued to keep lending rates steady, but it has no plan to raise deposit rates due to sufficient existing liquidity.

Deposits rate increases depend on the business strategy of a bank, while KBank pays attention mainly to helping vulnerable clients, offering them several instruments under long-term debt restructuring.

Bangkok Bank and Bank of Ayudhya have also announced plans to continue helping customers through various measures.

Source: https://www.bangkokpost.com/business/2369368/banks-pledge-to-maintain-prime-lending-interest-rate