The value of deposits under the Deposit Protection Agency (DPA) fell by 1.32% year-on-year, the first decline in a decade, attributed to a fragile economy and war in the Middle East, says DPA president Songpol Chevapanyaroj.
As of Aug 31, 2023, deposits amounted to 16.0 trillion baht, down by 212 billion baht from the end of 2022. Mr Songpol said the factors for this shift included uneven economic conditions, rising costs of living, and the search for alternative investments with higher returns than deposits, such as gold.
A total of 93.5 million depositors are protected in member financial institutions, an increase of 3.05 million or 3.37% from the end of last year.
Depositors at member financial institutions under the deposit protection law are protected by up to 1 million baht per account per financial institution.
This coverage amount fully protects retail depositors, who represent 98.1% of depositors in the financial institution system.
All groups of customers, including the wealthy and low-wage earners, face diminishing monetary amounts in their accounts, he said.
As of August 2023, depositors with amounts not exceeding 50,000 baht totalled 340 billion baht, down by 3.61% compared with a 0.63% contraction at the end of last year.
Furthermore, 80% of those depositors have less than 5,000 baht in their account, said the agency.
Depositors with between 50,000 baht and 1 million baht decreased in both the number of depositors (by 33%) and the amount of deposits over the past five years.
Mr Songpol said the factors affecting the economy and deposits include rising inflation and interest rates, the Russia-Ukraine war, the escalating Israel-Hamas conflict, the lingering effects of the Covid pandemic, and swelling household debt.
He said the interest rate gap between the US (more than 5%) and Thailand (2%) has led some depositors to withdraw their baht-denominated deposits and put the money in a foreign deposit account.
However, depositors in foreign currency deposit accounts are not protected by the DPA and must bear exchange rate risk despite receiving higher interest rates.