Her comment was in response to a question about whether her customers would move to the country's largest bank, where lending rates remained unchanged, while SCB led the market by hiking both lending and deposit rates 25-50 basis points early this month.

In loan contracts, banks and their customers are in clear agreement about loan maturities and repayment periods, and fees are levied for early debt repayment. Jada also said that most large customers were not in the habit of changing creditors very often.

"Prime lending rates are only market benchmarks. Real rate charges depend on the margin and discount a bank provides to customers. Therefore, lending rates among large banks are not very different," she said.

BBL has maintained its minimum lending rate (MLR) at 7.5 per cent per year, the lowest among the large banks. While other big banks have raised lending rates 25 basis points, with MLRs quoted at 7.75-8 per cent, the country's largest bank said it would keep its rates unchanged for another month.

Asked whether SCB would try to be more competitive by decreasing its rates to match BBL's, Jada said the bank would monitor the market trend before making any decision. Although SCB's lending rates are higher than BBL's, the bank's prospects for second-half loan expansion still look good.

She said SCB did not plan to adjust its projected 10-per-cent lending growth target for the entire year after achieving 6.6 per cent growth in the first half. That growth was driven mainly by investment expansion on the part of large corporations, particularly electronics, paper and pulp and petrochemical companies.

In addition, a double increase in commodity prices, such as for rubber, cassava and rice, supported the bank's lending in the agricultural sector. Rice mills and cassava houses also need more investment funding. And high demand in consumer finance, especially for mortgage loans, also helped boost SCB's loan growth.

 "Although consumer-loan margins are narrower, they're not very bad. Loan demand remains high, although it's not growing as much as it did in the past few years. With greater funding costs, the bank will focus more on providing retail loans," Jada said.

Factored by higher funding costs, the bank's spread between its deposit and lending rates will remain unchanged in the third quarter at 3.37 per cent.

Tanate Phutrakul, chief financial officer at TMB Bank, said TMB would not move its borrowing to BBL, even though BBL's MLR was lower than his bank's. He said loan borrowers did not consider interest rates alone, but also service and customer relations.

"If the MLR spread among large banks does not exceed 50 basis points, customers won't switch," he said. TMB's MLR is 8 per cent.

Somruedi Banchongduang

The Nation