Siam Commercial Bank (SCB) anticipates that the Bank of Thailand will start cutting its policy rate later this year, with further reductions likely to follow into early next year.
This expected move is poised to lead to a decrease in interest rates across the banking sector.
According to SCB chief executive Kris Chantanotoke, the central bank’s Monetary Policy Committee is likely to cut the policy rate by 0.25 percentage points in December, with a similar reduction anticipated next year. Following these cuts, the policy rate is expected to stabilize at 2% for the entirety of next year.
After these cuts, banks are expected to adjust their interest rates accordingly. While this may improve the debt repayment capabilities for certain customer segments, vulnerable borrowers with weaker debt-servicing capacity might not see the same benefit, Mr. Kris indicated.
“SCB is ready to collaborate with all stakeholders, including the government, the Bank of Thailand, and the Thai Bankers’ Association, to assist customers in alleviating their debt burdens and enhancing access to funding through responsible practices and sound risk management,” he stated.
In light of the uneven economic recovery, SCB has been closely monitoring asset quality. For sectors with higher credit risk, the bank has shifted its focus towards upper-income customers earning between 30,000 and 60,000 baht per month.
Mr. Kris noted that SCB will continue to monitor asset quality within this upper-income bracket as well.
He emphasized that sustainable finance is a key priority for SCB, which has grown its sustainable project finance portfolio to 111 billion baht as of 2023, with a goal of reaching 150 billion by 2025, positioning itself as the largest in the Thai banking sector.
The bank has also launched a program called Corporate Practice Excellence, aimed at transforming SCB into a sustainable organization.
SCB’s core strategies—artificial intelligence banking, digital banking with a personal touch, and responsible banking—will facilitate the bank’s transition toward sustainability, Mr. Kris remarked.
“Our aim is to gradually shift our total loan portfolio, currently valued at 2.3 trillion baht and serving 18 million customers, away from ‘brown loans’ and eventually towards ‘green loans’ in the long term,” he added.
Yunyong Thaicharoen, senior executive vice-president of SCB, stated that the bank also offers financial services and products that adhere to international standards known as science-based target initiatives to assist local businesses in transitioning to low-carbon emissions and achieving net-zero carbon goals.
As a member of the Equator Principles (EP) Association, SCB leverages these international standards to promote sustainable transitions. Since 2022, the bank has financed 53 projects valued at approximately 75.5 billion baht under EP guidelines.
Mr. Yunyong mentioned that SCB offers a range of sustainability-linked products, including green loans, sustainability-linked loans, sustainable bond underwriting, sustainable deposits, solar rooftop loans, electric vehicle loans, and transitioning financial services.
