CIMB Thai Bank's retail deposits might miss the target for this year as its main customers - the well-off - have switched to investment products that offer higher returns.
Adisorn Sermchaiwong, senior executive vice president, said yesterday that interest rates for deposits in the first half were not attractive, given the central bank’s policy rate of 2 per cent.
In the first six months, CIMB Thai’s retail deposits dropped by between Bt6 billion and Bt7 billion, but it sold investment products led by mutual funds worth Bt18 billion.
Most retail customers at the bank are affluent. They are smart investors, so deposit accounts might not meet their needs in terms of return, he said.
“We should open ways for customers who look for high returns on their investments. But deposits are essential for the bank in securing its customer base. We just have to manage the timing for offering deposit and investment products,” he said.
As long as the bank can offer investment products to respond to customers’ requirements, it might allow deposits to fall below the target. This year, CIMB Thai projects total deposits of Bt20 billion.
The bank yesterday introduced a 12-month fixed deposit paying 3.35 per cent for seniors aged 55 years and up making a minimum deposit of Bt50,000. It also launched an eight-month fixed deposit earning 2.8 per cent calculated daily. The minimum deposit is Bt10,000.
The interest rate of 3.35 per cent is the highest in the banking industry because the bank predicts that the hunt for deposits is expected to heat up late this quarter.
“Based on the good signs of economic recovery, credit demand will pick up and deposit mobilisation will be seen after the competition in this category in the first half tapered off,” he said.
Even though deposit-raising might miss the target, retail lending could reach the target, he said.
CIMB Thai aims to expand its loan portfolio to Bt70 billion from Bt50 billion last year. In the first half of this year, its new loans reached Bt12.5 billion, of which Bt10 billion was mortgages.