Local interest spread stays at appropriate level, says BoT

BANGKOK, July 13  – Bank of Thailand (BoT) Deputy Governor Krirk Vanikkul on Monday revealed Thailand’s interest spread, calculated based on net interest-based incomes earned by commercial banks at the end of the first quarter of 2010, stayed at an appropriate level if compared with those in other Asian countries.


He said the local interest spread stayed at 2.78 per cent while those in South Korea and Taiwan averaged 2.9 and 3 per cent. The spread had been gradually narrowed from that of the previous quarter.
The local spread could be further cut, but not considerably, Mr Krirk noted. The reduction should be less than 1 per cent and it must take a year to do that.

He said the spread could not be cut rapidly because Thai banks had to bear costs incurred from the liberalisation of the financial system under the second financial master plan implemented to ensure Thailand’s banking system is as strong as required under international rules.

Mr Krirk said local commercial banks are in a good position to lend given their strong financial position, substantial liquidity in the system, and their readiness to comply with the central bank’s rule.

At present, he said, loans made by the banks had resumed growth although extensions remain slow because many banks are concerned about the qualifications of borrowers, debt repayment prospects, and overall economic recovery.

The deputy BoT chief said a survey on business-sector costs found the interest cost borne by large companies stays at around 2-4 per cent of the total costs and that of small- and medium-size enterprises (SMEs) at about 4 per cent, which is considered low.

Hire-purchase rates or housing loan rates consumers formerly paid at higher than 10 per cent had been gradually reduced to 5-6 per cent at present, he
said.

By: MCOT online news