Bank rate cut to trim interest margin

Large local banks have lowered their interest rates in response to the Bank of Thailand's recent policy rate cut, a move that is expected to compress the banking sector's net interest margin (NIM) this year.

- SOMRUEDI BANCHONGDUANG

Domestic systemically important banks (D-SIBs) reduced interest rates following the central bank's policy rate cut of 25 basis points (bps) on April 30, bringing the benchmark rate down to 1.75%.

Thailand's six D-SIBs are Bangkok Bank (BBL), Krungthai Bank (KTB), Kasikornbank (KBank), Siam Commercial Bank (SCB), Krungsri (Bank of Ayudhya) and TMBThanachart Bank (ttb).

BBL, the country's largest lender by total assets, led the industry by cutting both deposit and lending rates effective as of May 8. Subsequently, KTB, KBank, ttb and Krungsri followed suit, with their rate cuts taking effect yesterday.