The Monetary Policy Committee (MPC) began raising its policy rates at the August and September 2022 meetings by 0.25 percent each, bringing the current policy rate to 1.00 percent. However, most large commercial banks did not hike their interest rates immediately and waited until October 2022, particularly deposit rates. A substantial increase has been seen in the launch of special deposit campaigns, chiefly by large and small commercial banks. Such campaigns have been introduced at an accelerating pace although they are intended to replenish deposits that have reached or are scheduled to reach maturity.
Although deposit growth was reported at around 3.6 percent YoY in September 2022, against the 4.0 percent at the end of 2021, pricing competition has gradually increased in the deposit market, probably driven by many factors. These include the MPC’s policy rate hikes, steady growth in loans, gradual declines in excess liquidity and attempts by commercial banks to maintain their deposit customers.
Looking ahead, although KResearch views that deposits will not grow at an accelerated rate, deposit rates are likely to rise in a steeper manner, driven by hikes in both the MPC’s policy rates and commercial banks’ interest rates (ahead of the scheduled increase in contributions to the Financial Institutions Development Fund by another 0.23 percent at the beginning of 2023). As a result, deposit rates may increase by more than 0.50 percent by 1Q23. Meanwhile, it is expected that deposits within the Thai commercial banking system will grow at roughly 3.5-3.7 percent at the end of 2022, versus the 4.0 percent growth reported at the end of 2021. However, deposits may grow slightly to 4.0-5.5 percent during 2023 in line with the steady economic recovery and commercial banks’ plans to maintain sufficient liquidity in order to accommodate loan growth.