Commercial banks unlikely to benefit from new levy
The new levy of 0.47 per cent on deposits of state-owned banks will likely not help commercial banks chase funds better because the drop in protection from August is unnerving depositors.
Based on the current fee of 0.4 per cent on deposits, the banking industry contributes Bt30 billion per year. With the hike to 0.47 per cent, the industry will pay out about Bt40 billion per year.
The surcharge of 0.47 per cent will have a small impact on commercial bank profits. However, after state-run banks are asked to pay the equivalent of 0.47 per cent of their total deposits, instead of zero currently, commercial banks would be expected to be able to increase their share of deposits.
However, the 11 commercial banks might not be able to increase their current market share of 72.6 per cent of total deposits of Bt10.5 trillion because of the maximum deposit guarantee ceiling of Bt1 million per bank per account beginning August 1.
Analysts said the lower deposit insurance cover has shaken up depositors, especially individuals.
The larger deposits would surely migrate to specialised financial institutions (SFIs), which tend to pay higher interest on their deposit products.
The SFIs are the Government Savings Bank, Government Housing Bank, Export-Import Bank of Thailand, Bank for Agriculture and Agricultural Cooperatives, Small and Medium Enterprise Development Bank of Thailand and Islamic Bank of Thailand. The effect on the annual net profits of three large commercial banks – Bangkok Bank, Siam Commercial Bank and Kasikornbank – is minimal at 3 per cent, 3.5 per cent and 2.5 per cent respectively.
Tisco Bank, Thanachart Bank and TMB Bank are expected to be the most affected at 12.7 per cent, 9.2 per cent and 7.4 per cent respectively, Finansia Syrus predicts.
Banks with bills of exchange (B/Es) will have to pay 0.46 per cent of total B/Es as a fee. Currently B/Es are not subject to a fee. Small and medium-sized banks that rely more on B/Es for fund-raising would be hard hit.
Finansia estimates the increase in deposit fee would affect the profits of commercial banks this year by about 3-4 per cent. Finansia estimates the net profits of the banking industry would grow by 9 per cent this year, much lower than 20 per cent last year.
The banking industry earned Bt129.55 billion last year.
The new levy will start on July 31.
