Local banks are expected to raise interest rates this week following the Bank of Thailand's recent policy rate hike, while borrowers could face a normalisation of loan rates for next year.
Two large Thai banks, Siam Commercial Bank (SCB) and Kasikornbank (KBank), already increased prime interest rates for both deposits and loans.
Last week the central bank's Monetary Policy Committee (MPC) voted unanimously to raise its benchmark policy rate by 25 basis points to 1.25%.
SCB increased its minimum lending rate (MLR) and minimum overdraft rate (MOR) both by 0.25 percentage points to 5.75% per year and 6.345%, respectively. The bank also raised deposit interest rates across the board, with a maximum rate hike of 0.45 percentage points, bringing deposit rates to a range of 0.25-1.40% per year.
KBank raised its MLR and MOR by 0.25 percentage points each to 5.95% and 6.34%, respectively, while increasing its minimum retail rate (MRR) by 0.13 percentage points to 6.1%.
The bank increased fixed deposit interest rates by 0.10-0.40%.
Krit Jitjang, co-president of KBank, said the bank is ready to help retail customers and small and medium-sized enterprises (SMEs) deal with their financial burdens, he said. KBank's hike of its MRR by only 0.13 percentage points was to support some vulnerable clients, such as individuals and SMEs, Mr Krit said.
Payong Srivanich, chairman of the Thai Bankers' Association and president at Krungthai Bank (KTB), said KTB would announce interest rate movements this week, with other large banks expected to follow suit.
Banks have to support some fragile borrowers, mostly households and SMEs, still struggling from the impact of the pandemic, he said.
Mr Payong said banks are offering long-term debt restructuring programmes to ease the financial burden of some clients and strengthen their debt repayment ability. Banks are collaborating with the central bank and other parties to implement a debt solution scheme, he said.
According to National Credit Bureau data, roughly 3 million individual borrowers still need financial assistance via a debt restructuring programme.
Mr Payong said interest rates would continue rising next year, in line with the MPC's policy normalisation.
Banks also have to pay the full fee for the central bank's Financial Institutions Development Fund of 0.46% of deposits from Jan 1, 2023, up from the current level of 0.23%. The resumption of the full fee will increase the financial costs of banks by 0.4-0.6%, with the cost passed on via lending rates next year, he said.
In addition, Mr Payong said KTB is mulling the central bank's virtual banking licence through a partnership with Advanced Info Service and Gulf Energy Development. The bank is waiting for clarification of the licence rules.
