BAAC expects stable deposit interest despite policy rate cut
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Despite the Bank of Thailand's recent cut in the policy interest rate, the Bank for Agriculture and Agricultural Cooperatives expects deposit rates to remain stable for a long period on concerns over tightening liquidity from the government's fund mobilis
Somsak Kangteerawat, executive vice president of BAAC, said competition remained high among financial institutions for deposits as the government plans to put a lot of investment into its infrastructure project, and the banks had to reserve money.
“Each [institution] is also afraid of losing deposit customers if it cuts interest rates. Deposit rates could stay at this level for a long time,” Somsak said.
BAAC’s current deposit base is Bt1.018 trillion. It targets raising deposits of Bt82 billion for this fiscal year ending March 2014.
The bank’s new loan target is set at Bt85 billion.
Although a part of BAAC’s liquidity is temporarily used for the pledging scheme, he said that would not affect the bank’s lending plan and operations.
BAAC’s excess liquidity is Bt100 billion or 12-13 per cent of its deposit base, higher than the BOT requirement of 6 per cent.
“We set aside Bt90 billion for the government’s rice-pledging scheme. When the government sells rice, it will make repayments to us,” Somsak said.
