Siam Commercial Bank (SCB) expects financial costs to continue declining as the cost of funding mobilised through both debenture issuance and deposits fell this year.
Cheap funding costs should improve the bank's total financial costs this year, said Kittiya Todhanakasem, SCB's chief financial officer and senior executive vice-president.
The country's second-largest commercial lender by assets allocated US$900 million (29.5 billion baht) in debentures, of which $400 million were senior unsecured notes with a maturity of five years issued in January.
The remaining $500 million have the same lifespan and were offered last month.
The first batch of the bank's debentures carried a coupon rate of 3.2% per year and another lot had an interest rate of 2.75%.
Both debentures have been rated Baa by Moody's Investors Service, BBB+ by Standard & Poor's (S&P) and BBB+ by Fitch Ratings.
The bank's new deposits increase by 7% from the beginning of this year. Its savings rate stands at 0.5%.
SCB continued to lower its cost of funding to 1.45% during the third quarter from 1.46% in the previous quarter and 1.48% in the first quarter.
She said the $900 million in debentures were issued to refinance matured debentures today worth $1.6 billion, but the bank has no plans to raise additional funds denominated in US dollars due as SCB is sufficiently liquid and higher funding costs are in line with the US rate hikes.
The US Federal Reserve jacked up its policy rate further this month, while the market expects the central bank will lift its benchmark rate by two to three times next year.
Mrs Kittiya said domestic deposits are the bank's key funding source and its 7% increase in deposits this year is attributed to promotional campaigns at drawing people to save money at the bank through its digital platform.
The bank offers deposits rate of 3% per year for customers who open "EZ Saving" accounts, which provides other benefits and privileges for digital banking transactions.
Moreover, she said the bank has invested around 18 billion baht in the SCB Transformation project spanning 2016 to 2018.
For next year, the budget will be injected into the core banking business, which comprises risk management systems, to prepare for the new international accounting standard, International Financial Reporting Standard 9, due to take effect from Jan 1, 2019.
SCB shares closed yesterday on the Stock Exchange of Thailand at 149.50 baht, down 2.50 baht, in trade worth 1.55 billion baht.