Thai interest rate cuts to ease loan load amid economic slowdown
In a move that promises relief for borrowers across Thailand, six leading commercial banks and a clutch of state-owned counterparts have slashed lending rates following the Bank of Thailand’s recent policy rate cut. This adjustment is designed to alleviate the financial strain as the economy slows down.
Domestic systemically important banks (D-SIBs) are joining forces to trim loan interest rates by 0.1-0.25 percentage points, aligning themselves with the central bank’s recent quarter-point cut to a modest 2% announced on February 26. This comes on the back of a nudge down in the GDP growth forecast for 2025, now pegged at just over 2.5%, from a previous 2.9%.
All six D-SIBs are lightening their minimum overdraft rate (MOR) by 0.25 percentage points, with the minimum retail rate (MRR) and minimum lending rate (MLR) following suit, down 0.1 percentage points.
Effective this week, the revised MLR is set to hover between 6.825% and 7.5%, MORs are sliding to between 7.02% and 7.35%, and MRRs are trickling to between 6.95% and 7.605%.
Bangkok Bank, Krungthai Bank, Kasikornbank, Siam Commercial Bank, Krungsri (Bank of Ayudhya), and TMBThanachart Bank are steering the charge.
Meanwhile, the Government Savings Bank (GSB) has dialled back its MLR and MOR by 0.25 percentage points to 6.65% and 6.495% respectively. Not to be left out, the Government Housing Bank (GHB) has whittled its MOR down by 0.25 percentage points to 6.15%, with its MLR also trimmed by 0.1 percentage points.
Both maintain their MRRs at 6.595% and 6.545%, the lowest on the block, with all cuts kicking in from March 5 until the end of August. GSB’s big cheese, Vitai Ratanakorn, reckons this will spur business growth to mirror economic vibes.
Adding to the rate-reducing chorus, the Export-Import Bank of Thailand (EXIM Bank) slips its prime rate by 0.10 percentage points to 6.25% effective on March 10, bringing it in line with the MRR of other banks.
Meanwhile, the Bank for Agriculture and Agricultural Cooperatives trims its MOR to 6.625% and its MRR to 6.725%, from tomorrow. EXIM Bank’s head honcho, Rak Vorrakitpokatorn, notes the cuts are set to boost liquidity for local enterprises amid a languid economy and fresh global trade anxieties.
According to the Kasikorn Research Center (K-Research), these cuts could mean a boon mainly for fresh loan agreements and a dip in interest for current borrowers, said a spokesperson for the bank.
“Retail and business loans, making up a hefty 56.4% of the local banking sector’s total loans, stand to gain the most, translating to interest savings of 7.3-7.5 billion baht this year.
“K-Research anticipates these savings will ease borrowers’ burdens around mid-year, trimming banks’ net interest income by 1-1.2% based on 2025 estimates, assuming the rate cuts sink in this month.”
The think tank is keeping a close eye on the economic tempo to gauge borrowers’ repayment strengths, with the central bank’s policy rate trajectory also in the spotlight.
The silver lining? K-Research holds steady on its prediction for the banking sector’s loan growth at 0.6% for the year, nudging up from a 0.4% slip in 2024.
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