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Top four Thai banks cut key lending rates in bid to aid growth
[BANGKOK] Thailand's four biggest banks cut lending rates on Tuesday in moves they said would help the country's flagging economy, and the central bank said it expects more banks to follow suit.
The cuts were the first by Thai commercial banks since May 2015, after the last policy rate trim by the Bank of Thailand (BOT).
It was unclear if the banks faced pressure to reduce rates from the BOT, which last month cut its 2016 growth forecast and said Southeast Asia's second largest economy was losing steam.
BOT Assistant Governor Jaturong Jantarangs said the rate cuts should help smaller businesses and are in line with its easy monetary policy. He also said he expects more banks to cut rates.
Thailand's biggest lender by assets, Bangkok Bank, said on Tuesday it is cutting its minimum lending rate (MLR) by 25 basis points (bps) to 6.25 per cent, effective on Wednesday.
The cut makes the lending rate "appropriate with Thailand's economic condition and helps lower financial costs" for business, Bangkok Bank Executive Vice President Chaiyarit Anuchitworawong told Reuters.
Earlier, number-three Siam Commercial Bank has cut its MLR by 15 bps to 6.375 per cent, with immediate effect.
The bank said it is "determined to help drive Thailand's economy forward and alleviate our clients' financial burdens".
Fourth-ranked Kasikornbank said it is cutting its MLR by 25 bps to 6.25 per cent, effective on Thursday.
Kasikornbank said this should help small and medium-sized enterprises, which have struggled to get credit the past two years after banks tightened lending criteria.
Second-largest lender Krung Thai Bank cut its MLR by 25 bps to 6.275 per cent.
The rate cuts battered shares of the banks, as investors feared narrower interest margins. SCB and Bangkok Bank fell more than 5 per cent, while shares of the other two were down about 2.7 per cent. The Thai stock market benchmark dropped 1.9 per cent.
Thai banks have sought to reduce exposure in the agricultural sector as low farm prices and the worst drought in more than 20 years have hurt farmers.
The cuts may help consumers struggling to clear record levels of household debt, which have been a drag on the economy.
Thai consumer confidence fell to a five-month low in March, a university survey showed on Tuesday.
At its last policy meeting in March, the BOT kept rates steady but cut its 2016 growth projection to 3.1 per cent from 3.5 per cent. Growth was 2.8 per cent in 2015.
In meeting minutes released on Tuesday, the BOT said risks to the economy were "skewed to the downside due to the fragile outlook for the global economy and the impact of the drought that could be more severe than expected".