Bank fight for deposits by offering high interest products
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The competition among commercial banks for deposits has heated up again as they strongly promote their special campaigns with high interest rates in a bid to ensure sufficient funds to serve the demand for loans in the second half.
Two weeks after the central bank’s Monetary Policy Committee lowered the benchmark interest rate by 25 percentage points to 2.50 per cent, the commercial banks have failed to cut their own rates. On the contrary, they have introduced high rates for their fixed deposits.
First CIMB Thai Bank introduced a 12-month product with the rate of 3.4 per cent per annum for deposits of Bt1 million to Bt10 million and 3.5 per cent for Bt10 million to Bt30 million. In fact, it launched this campaign before the MPC lowered the policy rate.
Since then, Bangkok Bank has launched a four-month fixed-deposit product paying 2.5 per cent per annum, a 10-month fixed deposit paying 2.75 per cent and a 15-month fixed deposit paying 3 per cent on Bt200,000 and above.
Tisco Bank also launched an eight-month fixed-deposit product paying 3.25 per cent per annum on amounts of Bt500,000 to Bt10 million.
Some banks plan to launch special campaigns in the second half to serve the peak season of consumer finance.
Kris Chantanotoke, executive vice president of Bank of Ayudhya, said that even though several banks had promoted the high rates for their fixed-deposit accounts, his bank’s existing time-deposit accounts were competitive.
Krungsri has a nine-month fixed-deposit product paying 3.1 per cent per annum and an 11-month time deposit with the rate of 3 per cent.
Krungsri expects to launch special deposit products in the second half because the demand for consumer loans will accelerate in the fourth quarter, he said. Its majority portfolio is retail loans.
Typically, the large banks set the trends, so the launch of a special time deposit by Bangkok Bank might encourage many others to launch similar campaigns to secure their deposit base, he said.
Weidt Nuchjalearn, senior executive vice president of Krungthai Bank, said the competition for deposits remained high and banks were expected to launch campaigns to mobilise funds as well as to prevent deposit reallocation.
The deposit-chasing trend is partly driven by the government’s upcoming water-management projects, he said. Each bank is preparing to lend to subcontractors of the bid winners, so the market should be more tense in the second half, which is the season of consumption.
Adisorn Sermchaiwong, senior executive vice president of CIMB Thai Bank, said it had promoted a high interest rate for its fixed deposits since early in the year as it wanted to expand its base of retail customers, and not so much for fund mobilisation to support lending.
The attractive rates will help persuade new customers to use the services and products of CIMB Thai, he said.
