Banks to maintain interest rate till year end

BANGKOK, 26 August 2009 (NNT) – Banks will not increase interest rates at this moment, but an adjustment can be made by the end of the year if loans expand very well in the second half.

Kasikornbank’s president, Prasarn Triratvorakul, said that according to the information of many commercial banks, there was no reason to increase interest rates at this moment because banks still had a lot of liquidity. The bank’s deposits decreased because it was allocated to invest in government bonds and corporate bonds.

The bond issuance of the Bank of Thailand (BoT) would only aim at absorbing surplus liquidity, therefore it would not affect the banks’ liquidity. Kasikorn bank tried to maintain the loan to deposit ratio at 95 percent.

He said that if the economy could recover as expected and loans expanded very well in the second half of the year, banks might raise deposits and interest rates might be adjusted at the end of the year to the beginning of next year. Currently no one could answer how much better the loan expansion in the second half would be compared to the first half.