KBank 'best placed' to cope with rate cuts
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Kasikornbank will be much less affected than the country's other three major banks once the sector reduces interest rates after last week's cut in the policy rate, according to an analyst at Phillip Securities.
KBank relies on non-interest income to the tune of 50 per cent of its income, and its ratio of savings to overall deposits is the highest among the four major banks.
This means that when interest rates for both lending and deposits decline, the institution is likely to maintain its profitability level, the analyst said.
The bank has lower deposit costs because its main source of funds is savings accounts, which account for 66 per cent of all deposits, the analyst added.
KBank’s non-interest income at 50 per cent of the total means that during a period of lower interest rates, it can offset the decline from lending income via its fee income.
Bangkok Bank, on the other hand, has a savings-to-deposits ratio of 43 per cent, and its interest income forms 70 per cent of the total. Therefore, the country’s largest bank will face high pressure in terms of making a profit from interest income, said the analyst.
Meanwhile, concern over lower spreads as a result of the expected round of interest-rate cuts in the banking industry caused the stock prices of the four major banks to drop in yesterday morning’s session on the Stock Exchange of Thailand, before rebounding in the afternoon.
Bangkok Bank stock fell nearly 2 per cent to Bt200 per share, but improved to Bt205 during the afternoon.
Krungthai Bank (KTB) and Siam Commercial Bank (SCB), the Kingdom’s second- and third-largest banks, also witnessed a decline in stock prices in the morning.
While SCB quickly bounced back to rise in the afternoon, KTB had not done so midway through the afternoon session.
KTB stock closed the session at Bt22.10, up Bt0.10 or 0.45 per cent.
KTB has a savings-to-deposits ratio of 60 per cent and an interest-income ratio of 79 per cent, while SCB’s figures are 50 per cent and 56 per cent respectively.
