Kbank sees no need to raise savings rate
There is nothing so far indicating a need to raise the interest rate on savings accounts this year, even though some savings have shifted to time deposits recently, Prasarn Trairatvorakul, president of Kasikornbank, said yesterday.
Customers have been moving their money from savings accounts to time deposits where interest rates are far higher, stirring intense competition among banks to offer ever higher returns. Prasarn's projection that the savings rate - 0.75 per cent at major banks - will remain unchanged assumes that other rate hikes from now on will not come as rapidly as before. Inflation is expected to head down, particularly in the second half of this year. "The BOT [Bank of Thailand] wants to see our real interest rate stay in positive territory. I expect it's possible the positive figure will appear next month, if inflation continues to subside," he said. Lower inflation would help relieve the upward pressure on interest rates. If interest rates continue climbing up sharply, bank borrowers would be constrained from expanding their business, banks would miss their loan targets and the overall economy would suffer a drag on performance. The policy of pushing up the local short-term benchmark rate to be on par with the US Federal Reserve's rate is misplaced, Prasarn said. The policy-signal rate of each country should reflect its internal situation rather than external factors. Even if Thailand's policy rate stays below the Fed funds' rate, the country would not see foreign capital draining out, he said. The policy rate here is lower than in the US, but foreign capital is still pouring in. The interest rate is not the only determinant of foreign-capital flows. They also depend on foreign-exchange rates and the country's economic fundamentals, he said. The country's fourth largest bank in assets is still keeping its loan growth target for this year at 6-9 per cent. However, it plans to conduct a mid-year review of its loan portfolio. Loan quality would be given top priority, given the current economic uncertainty, while loan expansion would be a secondary issue. The bank is also sticking to its target for non-performing loans this year at about 5 per cent, down from about 8 per cent last year. It has been working to reduce its bad assets by 2 per cent annually.
Somruedi Banchongduang The Nation
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