Banks compete for deposit as liquidity tightens
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Commercial banks have stepped up their competition for deposits since the second quarter, as liquidity has tightened, said a central bank official.
Navaporn Maharakaka, senior director of the Bank of Thailand's Financial Institution Strategy Division, said that it remains to be seen how fierce the competition could be in the second half, as this depends largely on loan growth.
According to the central bank, commercial banks' ratio of loan to deposit/bill of exchange rose to 92.4 per cent in the second quarter, compared to 90.2 per cent in the first quarter, buoyed by massive loan growth.
In the second quarter, bank loan growth expanded by 14.2 per cent compared to the same period last year and 3.8 per cent from the previous quarter. However, their deposit and BE base expanded by only 10.1 per cent on year and 1.5 per cent on quarter.
"What we witnessed in the second quarter was fiercer competition, and mostly they are competing in terms of deposit terms," Navaporn said.
She asserted that it is possible that loan growth in the second half may slow down, due to the massive demand in the first quarter spurred by flood-related renovation programmes. Meanwhile, global economic outlook may not show much improvement.
