News Column

Race for deposits hots up in H2

July 16, 2014

By Somruedi Banchongduang, Bangkok Post, Thailand

July 16--Competition for deposits among commercial banks in the second half is expected to be fierce as bankers project a rise in loan demand based on an estimated recovery.

Adisorn Sermchaiwong, senior executive vice-president of CIMB Thai Bank (CIMBT), forecasts the competition in raising funds through deposits will be stiffer the next two months, with some banks offering special interest rate campaigns to attract depositors.

To prepare for growing loan demand, banks are going to want to keep their existing deposit base after some deposits were moved to chase better returns in corporate bonds, mutual funds and equities.

Mr Adisorn said CIMBT deposits were flat in the first half, but its debentures grew by 18 billion baht because of portfolio allocation by customers.

In the second half, it plans to raise total funding of 30-40 billion baht with an aggressive marketing campaign, with 50% of the funding from deposits.

"We plan to launch four to five new deposit campaigns in the second half. As a small bank, bundling deposit packages, innovative features and pricing are the key strategies in a competitive market," he said.

The big local players include Bangkok Bank (BBL), Krungthai Bank and Kasikornbank (KBank), which have introduced new fixed-deposit packages with higher interest rates.

BBL offers fixed 11-month and four-month deposits with interest rates of 2.8% per year and 2%, respectively.

KTB launched a netbank time deposit campaign for 44 months and nine months with interest rates of 3.45% and 2.7%, respectively. The deposit packages are for internet banking clients.

KBank has a 14-month fixed-deposit package offering an interest rate of 2.8%, with interest payments available monthly.

Kris Chantanotoke, executive vice-president at Bank of Ayudhya (BAY), said it also recorded flat deposit growth in the first half in line with the industry. The bank plans to focus on increasing deposits in the second half, competing not only with other deposit campaigns but also various financial instruments amid tightening market liquidity in the second half.

"We aim to see deposit growth of 9-10% this year, but since the bank had flat growth in the first half it will require a big effort in the second half," he said.

Mr Kris added since the bank is hoping for such a huge amount of deposits over a short period, it will focus on wealthy customers by offering attractive interest rates.

BAY started a new eight-month fixed deposit account with an interest rate of 2.3% for the first three months, 2.7% for the fourth to sixth month, and 3.5% for the seventh to eighth month, averaging 2.75% per year if the deposit is kept to maturity. Monthly interest payments are available but require a minimum deposit of 10,000 baht.


(c)2014 the Bangkok Post (Bangkok, Thailand)

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Source: Bangkok Post (Thailand)

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