Banks are taking their time before making any decision on adjusting loan rates as next year there are several risks, particularly concern about a global recession and swelling household debt, despite reports of Thailand's economic recovery.
Kasikornbank (KBank) president Kattiya Indaravijaya said the bank would consider all related factors prudently before making any decision on an interest rate move amid higher uncertainties and several risk factors for 2023.
She said fear of a global recession and geopolitical tensions are the key macroeconomic risk factors next year.
Moreover, some of the bank's small and medium-sized enterprise (SME) customers and retail customers are still fragile, so the bank needs to consider any retail rate carefully, while the country's household debt remains a concern, said Ms Kattiya.
The bank's SME loan portfolio is quite large and plays a key role in its total loan structure.
"We need to consider any interest rate move carefully and balance business expansion and asset quality," she said.
"Looking ahead to next year, there will be a lot of uncertainties. We will also monitor reactions to the rate moves of our peers."
KBank, the country's second-largest lender by total assets, plans to continue growing digital loans for small entrepreneurs and retail customers, who are mostly underbanked clients, in 2023.
The bank has been growing digital loans with a total customer base of 500,000, representing new loans worth 23 billion baht, said Ms Kattiya.
She said KBank forecasts an improving economic outlook for next year compared with this year, supported by the rebound of the tourism sector and more foreign arrivals.
However, the export sector faces more challenges because of the projected global economic slowdown, concerns about recession and geopolitical risks, said Ms Kattiya.
Bank of Ayudhya chief executive Seiichiro Akita said in a statement the bank is monitoring markets on lending rate adjustments and considering any potential impact before making a decision on rate movement following the Bank of Thailand's policy rate hikes.
The Monetary Policy Committee voted unanimously on Wednesday to raise its policy benchmark rate another 25 basis points to 1.25% under the central bank's policy normalisation strategy.
Chartsiri Sophonpanich, president of Bangkok Bank, said the economy would continue to recover next year, as the Bank of Thailand projects GDP growth of 3.2%, 3.7% and 3.9% in 2022, 2023 and 2024, respectively.
Tourism is the key engine driving the country's economic growth for the next two years, with foreign arrivals projected at 10 million, 20 million and 30 million for 2022, 2023 and 2024, respectively.
In 2019, foreign visitors tallied almost 40 million.
The country's economic recovery will support local business expansion, investment and foreign direct investment, according to the central bank.
In this scenario, a recovery would encourage the supply chain and boost Thailand's economic growth as well.
