What To Know
- Banks Respond to Central Bank Decision Thailand’s major commercial banks have swiftly moved to slash lending rates after the Bank of Thailand (BOT) reduced its benchmark policy rate to the lowest level in more than two years.
- Krung Thai Bank President Payong Srivanich, who also heads the Thai Bankers Association, said the adjustment is designed to help all customer groups cope with the rapid shifts in global production and supply chains, as well as heightened competition.
Bangkok Business News: Banks Respond to Central Bank Decision Thailand’s major commercial banks have swiftly moved to slash lending rates after the Bank of Thailand (BOT) reduced its benchmark policy rate to the lowest level in more than two years. The central bank’s decision, aimed at supporting an economy pressured by new US tariffs and slower global trade, saw Bangkok Bank Pcl lead the way with a 25-basis-point reduction. Other key players, including state-run Krung Thai Bank Pcl, Kasikornbank Pcl, Siam Commercial Bank Pcl and Government Savings Bank, followed suit with matching cuts.
Thai Banks splash lending rates after BOT reduces its benchmark ratio
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Krung Thai Bank President Payong Srivanich, who also heads the Thai Bankers Association, said the adjustment is designed to help all customer groups cope with the rapid shifts in global production and supply chains, as well as heightened competition. This Bangkok Business News report comes after the BOT’s Monetary Policy Committee unanimously voted to lower the policy rate to 1.5%, bringing total cuts to 100 basis points since October. For the first time in this easing cycle, lenders have fully passed the reduction to customers, compared to just 43% on average for previous cuts.
Economic Headwinds Prompt Rate Relief
The BOT has signaled a continued accommodative stance, anticipating sluggish growth into early 2026. The slowdown is linked to a 19% US tariff on Thai exports, softer domestic consumption, and falling tourist numbers. Assistant Governor Sakkapop Panyanukul emphasized the importance of banks transferring the benefits of lower rates to borrowers. Wednesday’s meeting marked the final session chaired by Governor Sethaput Suthiwartnarueput, who steps down on September 30.
Incoming governor Vitai Ratanakorn, known for supporting rate cuts, praised the banks’ moves and said lower borrowing costs will help sustain both businesses and households. Thai ministers, particularly Finance Minister Pichai Chunhavajira, have consistently urged banks to provide relief to small businesses and heavily indebted households. The Finance Minister noted the latest cut should improve liquidity and strengthen the baht by discouraging banks from parking funds with the central bank.
Future Outlook and Challenges
Economists, including HSBC’s Aris Dacanay, expect the BOT may lower rates by a further 50 basis points by early 2026, potentially bringing the key rate to 1% to spur lending. However, the actual impact will depend on whether banks remain cautious in extending credit despite the cheaper funds.
While borrowers may welcome the relief, analysts warn the move will compress profit margins, particularly for institutions like Bangkok Bank. With net interest margins already under pressure from weak loan demand, further cuts could test the resilience of the country’s biggest lenders. The coming months will reveal whether the banking sector can balance profitability with its role in stimulating the economy.
As Thailand navigates economic headwinds, the collaboration between the BOT and commercial banks will be pivotal in sustaining growth and shielding households and businesses from prolonged financial strain. For the latest on Thai Banks, keep on logging to Bangkok Business News.