Thai banks reduce loan rates to alleviate customer debt

The four biggest banks in the country have all declared a drop in their loan interest rates. This decision by Bangkok Bank (BBL), Krungthai Bank (KTB), Kasikornbank (KBank), and Siam Commercial Bank (SCB) is a response to the prime minister’s call to lessen loan rates to help ease the debt pressure on susceptible customers.

An anonymous banking sector analyst opines that the loan rate reductions by these banks will affect 7% to 10% of their total loan portfolios, they said in a joint statement.

“The impact of the loan rate cuts will be limited, aiding the banks in managing asset quality in the face of an uneven economic recovery,”

The biggest lender in the country by total assets, BBL has made a 25 basis point cut in its minimum retail rate (MRR) across all segments. The cut will be in effect for six months from April 29, primarily affecting individuals and small and medium-sized enterprises (SMEs).

KTB has decided to reduce all kinds of loan rates, including MRR, minimum lending rate, and minimum overdraft rate, by 25 basis points for six months, from May 16 to November 15. This rate cut will benefit vulnerable customers identified as of March 31. The bank’s rate reduction is expected to impact around 300,000 retail loan accounts with a total credit line of 200 billion baht.

KBank has announced a 25 basis point decrease for floating-rate loans, effective for six months from May. The rate cut will apply to vulnerable customers defined by the bank, which includes mortgage and SME loans. Approximately 200,000 customers are eligible for the loan rate reduction, with a total credit line of 82 billion baht.

SCB has stated that it will lower its MRR by 25 basis points for six months for vulnerable mortgage and SME customers, beginning May 16. The bank identifies vulnerable mortgage customers as those with a maximum credit line of 2 million baht while vulnerable SMEs have a maximum credit line of 2 million baht, as of March, reported Bangkok Post.