Thai depositors have responded well to a series of deposit interest-rate hikes, as witnessed by the fact that outstanding deposits in accounts with maturities of between six and 12 months rose by 240 per cent year on year to Bt1.06 trillion in July.

Total deposits in July grew by about 10 per cent from the corresponding period last year.

The rise in six- to 12-month time deposits in July exceeded the 150-per-cent year-on-year increase in June, according to the Bank of Thailand (BOT).

Fixed deposits during the period rose by 8.8 per cent month on month, compared with a 3-per-cent rise in June from the previous month.

As a result, time deposits shot up from 5.3 per cent last July to 16 per cent of total deposits at Bt6.59 trillion.

The shifts indicated an active response on the part of depositors to the expectation that market rates would not go up further following the central bank's decision on July 19 to hold the policy interest rate unchanged at 5 per cent. Also, many bankers signalled that market rate increases had nearly come to an end.

Commercial banks raised deposit rates by 0.25 percentage points in June but did not raise them in July.

Despite the signal of almost peak deposit rates, depositors seem to have preferred medium-term deposits to longer-term in July for fear that they could miss an opportunity if the banks did raise rates again.

BOT assistant governor Krirk Vanikkul said the higher deposit rates had bolstered overall deposits.

Depositors go for short periods if they expect interest rates to rise and long periods if they see them falling.

"It also depends on the banks' financial management matching funds properly," Krirk said.

Money parked in time-deposit accounts with maturities of three months to six months in July also rose 72 per cent year on year to Bt591.7 billion.

July showed a year-on-year growth in maturity time deposits of 73 per cent over June. However, money in fixed-deposit accounts in July rose marginally by 0.7 per cent over June, accounting for 9 per cent of total deposits, up from 5.8 per cent in the same period of last year.

Earlier, Siam Commercial Bank SCB) president Jada Wattanasiritham said she was encouraging savers to shift their money to longer-term deposits.

Some depositors, however, seek higher returns from putting money in accounts with maturities longer than two years, and these in June represented Bt346.4 billion, up 10.15 per cent on year.

Deposits with maturities shorter than three months declined by 3.1 per cent to Bt1.71 trillion, accounting for 25.9 per cent of total deposits, compared to 29.7 per cent in the same period last year, but remained the highest proportion of time deposits.

Twelve- to 24-month time deposits were Bt154.9 billion, down 21 per cent from last year.

Outstanding savings deposits in July declined by 10.6 per cent from the corresponding period last year to Bt2.4 trillion. They totalled 36.9 per cent of total deposits, down from 45.8 per cent in the same period last year.

Anoma Srisukkasem

The Nation