TBank eyes Q2 deposit race heat-up

TBank eyes Q2 deposit race heat-up

People visit a Thanachart Bank in Bangkok. PATIPAT JANTHONG
People visit a Thanachart Bank in Bangkok. PATIPAT JANTHONG

Thanachart Bank (TBank) expects intensified deposit competition and a deposit rate hike next quarter -- a phenomenon unseen for several years -- following growth in corporate loan demand.

The country's economic recovery and banks' higher loan growth targets for this year should stoke deposit competition, said senior vice-president Komchalat Piteeprom. Stronger demand for corporate loans from large banks should dry up excessive financial liquidity, he said.

The banking industry has set loan growth targets in a range of 4-7% for this year.

"We should see a deposit rate hike around the second quarter, led by longer-term fixed deposits at large banks. For instance, a 20-month fixed-deposit campaign with an interest rate in the range of 1.6-1.8% could be launched and would be a sign of greater deposit competition," said Mr Komchalat.

On average, the fixed deposit rates of large Thai banks are in a range of 1.2-1.4%.

Some economists forecast the Bank of Thailand's Monetary Policy Commission will start to synchronise with the rate hikes of its US counterpart in the second half, as the local benchmark rate has been kept unchanged since April 2015, when the rate-setting panel cut it by 25 basis points.

To lock in cheap financial costs, banks are expected to begin offering special deposits products with attractive interest rates during the April-to-June quarter.

TBank, the country's sixth-largest lender by assets, Wednesday emerged as the first mover by launching a special savings product, Ultra Savings, combining savings and fixed-deposit accounts with annual interest rates in a band of 0.8-1.5%, depending on the deposit amount.

A minimum deposit of 100,000 baht and a maximum of no more than 10 million are required for Ultra Savings, which is available until April 30.

Mr Komchalat said the new deposit product will help the bank expand its customer numbers rather than increase its outstanding deposits.

A larger customer base would enable the bank to offer other financial products and services and raise TBank's cross-sell ratio. Typically, new deposit customers also need to apply for debit cards and mobile banking services, which can lead them to use transactional services.

TBank aims to add 700,000-800,000 new accounts this year, in addition to 4-5 million at present. The bank also targets outstanding deposits growth of 6-7% in 2018, up from 700 billion baht last year.

The bank's total deposits rose by 7% last year.

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