Siam Commercial Bank (SCB) expects the Bank of Thailand will begin cutting its policy rate later this year, with additional reductions likely continuing into early next year.
The move is expected to prompt a reduction in interest rates across the banking sector.
According to SCB chief executive Kris Chantanotoke, the central bank's Monetary Policy Committee is likely to reduce the policy rate by 0.25 percentage points in December this year, followed by a similar cut next year.
After that, the policy rate is expected to stabilise at 2% throughout next year, he said.
Following these cuts, banks are projected to adjust their interest rates accordingly. While this would enhance the debt repayment capabilities for some customer segments, it may not fully benefit vulnerable borrowers with weaker debt-servicing abilities, said Mr Kris.
"SCB is prepared to work with all stakeholders, including the government, the Bank of Thailand and the Thai Bankers' Association, to help customers alleviate their debt burdens and improve access to funding through responsible practices and sound risk management," he said.
Given the uneven economic recovery, SCB has been monitoring asset quality. For segments with higher credit risk, the bank has shifted its focus to upper-income customers with monthly incomes between 30,000 and 60,000 baht.
SCB will continue to monitor the asset quality within this upper-income segment as well, said Mr Kris.
He said sustainable finance remains a key focus for SCB. The bank has grown its sustainable project finance portfolio to 111 billion baht as of 2023, with a target of reaching 150 billion by 2025, making it the largest in the Thai banking sector.
The bank also implemented a programme called Corporate Practice Excellence, aimed at transitioning SCB into a sustainable organisation.
The bank's core strategies -- artificial intelligence banking, digital banking with a human touch and responsible banking -- will support SCB's transition towards a sustainable bank, said Mr Kris.
"Our goal is to gradually transition our total loan portfolio, valued at 2.3 trillion baht and serving 18 million customers, to less brown loans and eventually to green loans in the long term," he said.
Yunyong Thaicharoen, senior executive vice-president of SCB, said the bank also provides financial services and products aligned with international standards called science-based target initiatives to help local businesses transition to low-carbon emissions and reach net-zero carbon goals.
SCB is a member of the Equator Principles (EP) Association, leveraging these international standards to support sustainable transitions. The bank has financed 53 projects worth around 75.5 billion baht under EP guidelines since 2022.
Mr Yunyong said SCB offers a variety of sustainability-linked products, including green loans, sustainability-linked loans, sustainable bond underwriting, sustainable deposits, solar rooftop loans and electric vehicle loans, as well as transitioning financial services.