The state-run Government Savings Bank (GSB) will try to maintain its interest rates for as long as possible amid a rising global trend in order to alleviate the burden on its borrowers, says bank president Vitai Ratanakorn.
He advised companies to boost their liquidity, which could take a hit after future rate increases.
The Bank of Thailand has signalled a policy rate hike could happen soon in response to persistently high inflation. Research houses predict Thailand will enter a cycle of rate increases in the second half this year.
Mr Vitai could not predict if the bank will maintain its interest rates until the end of this year, or how long it can keep its current rates as the economic situation is changing quickly.
He said GSB's attempt to maintain the rates could affect the bank's profits, but said the bank is ready to shoulder the burden. Mr Vitai said the bank's profits in the first half of this year exceeded its target.
GSB's non-performing loans (NPLs) stood at 2.7% of the total as of May, while its reserves were 165% of the value of the NPLs.
Loans with fixed interest rates will not be affected by a rate hike when paying monthly instalments, he said.
New borrowers will have to pay higher instalments. For example, if a customer borrows 1 million baht, in general the customer will pay monthly instalments of 7,000 baht, said Mr Vitai. If he or she borrows after the rate hike, the instalment may surge to 7,500-8,000 baht per month.
GSB recently partnered with Dhipaya Group Holdings and Bangchak Corporation to set up a lending joint venture using land titles as collateral, in a bid to let small enterprises and individuals more easily access loans at a lower cost. The venture, dubbed "Mee Tee, Mee Ngern" (land for loan), is expected to provide services in the third quarter.
