SCB predicts Bank of Thailand to lower rates by 0.25%

Siam Commercial Bank (SCB) anticipates the Bank of Thailand (BoT) will initiate a series of policy rate cuts starting later this year, potentially continuing into early next year. This move is expected to trigger a reduction in interest rates across the banking sector.

SCB’s Chief Executive Kris Chantanotoke predicts the central bank’s Monetary Policy Committee will reduce the policy rate by 0.25% in December, followed by a similar reduction next year. The policy rate is then expected to stabilise at 2% throughout the upcoming year.

Banks are projected to adjust their interest rates following these cuts. This adjustment could improve the debt repayment capabilities for some customer segments, although it may not fully benefit borrowers with weaker debt-servicing abilities, said Kris.

“SCB is prepared to work with all stakeholders, including the government, the BoT and the Thai Bankers’ Association, to help customers alleviate their debt burdens and improve access to funding through responsible practices and sound risk management.”

Monitoring asset quality has become a priority for SCB, particularly given the uneven economic recovery. The bank has shifted its focus to upper-income customers with monthly incomes between 30,000 and 60,000 baht, especially within segments with higher credit risk.

SCB will continue to observe the asset quality within this upper-income segment.

Sustainability finance

Sustainable finance remains a central focus for SCB. The bank has expanded its sustainable project finance portfolio to 111 billion baht as of this year, aiming to reach 150 billion baht by 2025, positioning it as the largest in the Thai banking sector.

Additionally, SCB has implemented a programme called Corporate Practice Excellence, which aims to transition the bank into a sustainable organisation.

The bank’s core strategies—artificial intelligence banking, digital banking with a human touch, and responsible banking—are designed to support SCB’s transition towards sustainability, said Kris.

“Our goal is to gradually transition our total loan portfolio, valued at 2.3 trillion baht and serving 18 million customers, from brown loans to green loans in the long term.”

Yunyong Thaicharoen, Senior Executive Vice-President of SCB, highlighted that the bank provides financial services and products aligned with international standards, known as science-based target initiatives, to help local businesses transition to low-carbon emissions and achieve net-zero carbon goals.

SCB is a member of the Equator Principles (EP) Association, using these international standards to support sustainable transitions. Since 2022, the bank has financed 53 projects worth approximately 75.5 billion baht under EP guidelines.

Yunyong mentioned that SCB offers a variety of sustainability-linked products, including green loans, sustainability-linked loans, sustainable bond underwriting, sustainable deposits, solar rooftop loans, electric vehicle loans, and transitioning financial services, reported Bangkok Post.