The country's four largest banks expect a limited impact from the reduction in their loan interest rates based on the specific customer demographics and the limited time frame of the debt relief measures.
Bangkok Bank (BBL), Krungthai Bank (KTB), Kasikornbank (KBank) and Siam Commercial Bank (SCB) each announced decreases to their lending interest rates.
This move stems from the prime minister's directive urging them to lower loan interest rates to alleviate the debt burden on vulnerable customers.
According to an analyst in the banking sector, the loan rate cuts by the four major banks account for 7-10% of each bank's total loan portfolio.
"The impact of the loan rate cuts will be limited, helping the banks in managing asset quality amid an uneven economic recovery," said the analyst, who requested anonymity.
BBL, the country's largest lender by total assets, cut its minimum retail rate (MRR) by 25 basis points across all segments for a duration of six months, effective from April 29.
This adjustment primarily affects individuals and small and medium-sized enterprises (SMEs), said BBL.
KTB decided to reduce all types of loan rates, including MRR, minimum lending rate and minimum overdraft rate, by 25 basis points for a six-month period, from May 16 to Nov 15.
The rate cut will specifically benefit vulnerable customers identified as of March 31, according to KTB.
The bank classifies vulnerable clients as individuals still using its debt aid measures, mortgage clients with a maximum credit line of 2 million baht, and SMEs with a maximum monthly income of 2 million baht and a credit line of no more than 10 million baht.
KTB's loan rate reduction is estimated to affect about 300,000 retail loan accounts with a total credit line of 200 billion baht.
KBank announced a decrease of 25 basis points for floating-rate loans, effective for six months from May.
This rate cut applies to vulnerable customers as defined by the bank, encompassing mortgage and SME loans.
Around 200,000 customers qualify for the loan rate reduction, with a total credit line of 82 billion baht, according to KBank.
For mortgages, the rate cut applies to customers with a maximum credit line of 2 million baht as of March and earnings of no more than 30,000 baht per month.
KBank also extended the rate cut to SME clients with outstanding loans and working capital not exceeding 2 million baht, as well as annual sales of up to 200,000 baht.
SCB said it will lower its MRR by 25 basis points for six months for vulnerable mortgage and SME customers, starting from May 16.
The bank identifies vulnerable mortgage customers as those with a maximum credit line of 2 million baht, while vulnerable SMEs have a maximum credit line of 2 million baht, as of March.