SCB suggests reallocation of deposits

These alternative investment products feature low risk and are available through the bank, according to Adisorn Sermchaiwong, executive vice president and head of the Savings and Investment Products Division, who said customers preferred simple, low-risk products to complicated ones, given the murky economic conditions and the uncertainty of corporate health.

"What we should be concerned about is the interest rate, which has dropped to just over 1 per cent at all banks. It's our duty to seek alternative investments, including mutual funds and life insurance," he said.

Thailand's third largest bank by assets is promoting one of its money-market funds, SCB Savings Fixed-Income Fund, which is the biggest in the industry, with assets of Bt150 billion. The advantage is high liquidity similar to that of a savings account joined to returns of over 2 per cent tax-free. The fund mainly invests in short-term government bonds and bank deposits.

Property funds are another attractive investment tool, he said, as they offer far better returns than bank deposits but are appropriate for long-term investors due to their low liquidity.

He gave as an example the Quality House Property Fund, managed by SCB Asset Management, offering a dividend of Bt0.70 a unit, representing about 12 per cent based on its price of Bt6 per unit.

Adisorn said the bank would this year aggressively introduce investment products to the growing population of salaried workers in need of retirement savings but with limited options. It sees an opportunity here to provide investment planning to retail customers.

It will start with a packaged menu bundling many products to teach them how to allocate their investments, he said.

In March it will introduce life insurance tailored to women, covering breast and cervical cancer plus a discount on accident insurance.

Adisorn said a number of corporate bonds would be available in the primary market this year and were worthwhile investment instruments in a low-interest-rate environment.

The bank's 10 million accounts, totalling Bt902 billion, are expected to grow by Bt70 billion this year, Bt30 billion less than last year.

Fee income from mutual funds and bancassurance is expected to jump 20 per cent and over 30 per cent respectively.

The bank is installing a system to collect all the financial information on its customers in a bid to guide their investments, but this will not be available till next year.