Stable deposit base of Thailand's banking system
By Jon Fernquest
Interest rates on bank accounts in Thailand
continue to drop to their lowest level in years.Despite this trend, local bankers do not expect significant shifts in funds out of Thai banks to other kinds of investments in the near future.
Savings deposits account for the bulk of Thailand's bank deposits.
Of the 75.3 million deposit accounts recorded in the banking system at the end of 2008, 61.89 million were savings accounts, of which 57 million had account balances of less than 50,000 baht, according to the Bank of Thailand.
Most bank customers use savings accounts to manage routine transactions.
Savings accounts provide convenience but earn very little interest income. Most banks have cut back their savings deposit rates to just 0.5% and three-month fixed deposit rates to 0.75% to 1%, a rate not seen since 2001.
Global crisis effect on deposit insurance and deposits
Before the global crisis erupted last year changes were made in Thailand's banking laws.A gradual reduction of deposit insurance for Thai bank accounts was expected to cause a flow of funds out of bank deposits to investments with higher risk and return (Read article).
After the global crisis began in September, countries around the world began to increase deposit insurance coverage (Read article).
Thailand backtracked and followed suit. Some economists have even argued that western banks must return to a much more simpler and largely deposit-based banking system similar to Thailand's (Read article).
stable - firmly
fixed, not likely to move or change a lot, not likely to fail
คงที่ ไม่เปลี่ยนแปลง
savings accounts, savings deposits - bank accounts that can be withdrawn at any time, that pay a low interest rate บัญชีออมทรัพย์
time deposits, fixed accounts - - bank accounts at a bank that require money to be left there for a fixed period of time that provide a fixed rate of interest บัญชีฝากประจำ
deposit base - all the deposits in a country's banking system, that do not change much over time, that allow the banking system to operate normally
significant - large enough to be important or have an effect ที่สำคัญยิ่ง
X accounts for Y% of Z - X is Y% of Z x มีค่าเป็นเปอร์เซนต์ของ z
the bulk of - most of ส่วนสำคัญ ส่วนมาก
routine - the usual series of tasks that are done as part or a job or work กิจวัตร
task - a piece of work that someone does หน้าที่
a transaction - a piece of business done between two people or companies (especially buying and selling goods) การทำธุรกรรมทางธนาคาร
provide convenience - make life and business easier for you ให้ความสะดวก
interest income - money earned from a bank for keeping your money in the bank ดอกเบี้ยเงินฝาก
three-month fixed deposit rates - the interest paid by a bank to depositors for keeping their money in the bank for three months อัตราดอกเบี้ยเงินฝากประจำ 3 เดือน
erupted - happen suddenly and dangerously (like a vocano erupting) ระเบิดขึ้น
deposit insurance - a government guarantee to pay depositors of banks if they fail
savings accounts, savings deposits - bank accounts that can be withdrawn at any time, that pay a low interest rate บัญชีออมทรัพย์
time deposits, fixed accounts - - bank accounts at a bank that require money to be left there for a fixed period of time that provide a fixed rate of interest บัญชีฝากประจำ
deposit base - all the deposits in a country's banking system, that do not change much over time, that allow the banking system to operate normally
significant - large enough to be important or have an effect ที่สำคัญยิ่ง
X accounts for Y% of Z - X is Y% of Z x มีค่าเป็นเปอร์เซนต์ของ z
the bulk of - most of ส่วนสำคัญ ส่วนมาก
routine - the usual series of tasks that are done as part or a job or work กิจวัตร
task - a piece of work that someone does หน้าที่
a transaction - a piece of business done between two people or companies (especially buying and selling goods) การทำธุรกรรมทางธนาคาร
provide convenience - make life and business easier for you ให้ความสะดวก
interest income - money earned from a bank for keeping your money in the bank ดอกเบี้ยเงินฝาก
three-month fixed deposit rates - the interest paid by a bank to depositors for keeping their money in the bank for three months อัตราดอกเบี้ยเงินฝากประจำ 3 เดือน
erupted - happen suddenly and dangerously (like a vocano erupting) ระเบิดขึ้น
deposit insurance - a government guarantee to pay depositors of banks if they fail
Shifting from bank deposits to higher yielding assets?
Some depositors may shift funds to other products, such as money-market funds, insurance or debentures in search of higher returns.For other depositors volatility in the financial markets, pessimism about economic prospects and the ongoing global deleveraging and disinflation cycle will curb the impulse to shift funds to other asset classes, even with the meagre returns now offered for cash deposits.
Further rate cuts in the future might spur more people to shift their funds out of savings deposits. Thailand's policy interest rate "might fall another 50 basis points [from 1.5% now]. This would push three-month fixed rates down to 0.6% to 0.65%, with savings deposit rates cut possibly to 0.25%."
Some experts believe that this is unlikely to happen: "The country's savings deposit base is primarily comprised of retail customers with small deposits. I don't think that they would look to shift to riskier, higher-yielding products due to the inconvenience and the risk. Poor understanding of more complicated financial products is another barrier."
money-market funds -
a company that invests money for other people (a fund), buys low risk
investments rather than higher risk stock shares, this
includes certificates of deposit (CDs) which are money
borrowed by banks for short periods or treasury bills (T Bills) which
is money borrowed by the US government for a short periods under one
year)(See Wikipedia)
debentures - a long-term loan paying a interest rate (in UK secured by company's assets, in the US not secured) ใบหุ้นกู้ของบริษัท
volatility - changing suddenly and unexpectedly (bad because it makes it difficult to make decisions) ความไม่แน่นอน
pessimism - having a negative opinion about what will happen in the future การมองโลกในแง่ร้าย
prospects - what might happen in the future, the possibility of success in the future (See glossary) ความเป็นไปได้
economic prospects - the possibility of a good economy or making money in the future สภาพการณ์เศรษฐกิจในอนาคต
ongoing - currently happening right now (has not finished yet) อย่างต่อเนื่อง
deleveraging - reducing the amount of borrowed money you use, reducing loans ลดเกินกู้
disinflation - when the general price level in an economy grows at a slower pace (note: deflation means price level actually decreasing, dangerous) เมื่ออยู่ในช่วงภาวะเงินฝืดทั้งภาครัฐบาลและภาคเอกชนต่างก็ชักชวนต่างชาติให้เข้ามาร่วมลงทุนในประเทศไทย
cycle, business cycle - economies go up and down, sometimes businesses and households are, in general, making a lot of money and the economy is growing quickly, other times business is bad and incomes suffer (See Wikipedia) วงจรเศรษฐกิจ
curb - stop or reduce something a lot ระงับ
impulse - a sudden desire to do something แรงผลักดัน แรงกระตุ้น
curb the impulse - control and stop the sudden desire to do something ลดแรงกระตุ้น
meagre - very small amount จำนวนน้อยมาก
spur - cause ก่อให้เกิด
policy interest rate - an interest rate set by the government central bank to supply the amount of credit and money in an economy นโยบายหรือการกำหนดอัตราดอกเบี้ยของแบงค์ชาติ
credit - the total amount of loans in an economy เครดิต เงินกู้ทั้งหมด
a basis point - one hundredth of one per cent, used to express the interest rate on bonds, for example the bond interest rate was "50 basis points higher than last month" means "0.5 higher than last month"
savings deposit base
retail customers - small depositors like individuals, not businesses who use other banking services and who have a more complicated relationship with the bank ลูกค้ารายย่อย
primarily composed of retail customers - most of the customers are retail customers
riskier, higher yielding products - investors usually receive higher returns in exchange for higher risk
inconvenience - something that causes problems, difficulties, delays for you ความยากลำบาก อุปสรรค
debentures - a long-term loan paying a interest rate (in UK secured by company's assets, in the US not secured) ใบหุ้นกู้ของบริษัท
volatility - changing suddenly and unexpectedly (bad because it makes it difficult to make decisions) ความไม่แน่นอน
pessimism - having a negative opinion about what will happen in the future การมองโลกในแง่ร้าย
prospects - what might happen in the future, the possibility of success in the future (See glossary) ความเป็นไปได้
economic prospects - the possibility of a good economy or making money in the future สภาพการณ์เศรษฐกิจในอนาคต
ongoing - currently happening right now (has not finished yet) อย่างต่อเนื่อง
deleveraging - reducing the amount of borrowed money you use, reducing loans ลดเกินกู้
disinflation - when the general price level in an economy grows at a slower pace (note: deflation means price level actually decreasing, dangerous) เมื่ออยู่ในช่วงภาวะเงินฝืดทั้งภาครัฐบาลและภาคเอกชนต่างก็ชักชวนต่างชาติให้เข้ามาร่วมลงทุนในประเทศไทย
cycle, business cycle - economies go up and down, sometimes businesses and households are, in general, making a lot of money and the economy is growing quickly, other times business is bad and incomes suffer (See Wikipedia) วงจรเศรษฐกิจ
curb - stop or reduce something a lot ระงับ
impulse - a sudden desire to do something แรงผลักดัน แรงกระตุ้น
curb the impulse - control and stop the sudden desire to do something ลดแรงกระตุ้น
meagre - very small amount จำนวนน้อยมาก
spur - cause ก่อให้เกิด
policy interest rate - an interest rate set by the government central bank to supply the amount of credit and money in an economy นโยบายหรือการกำหนดอัตราดอกเบี้ยของแบงค์ชาติ
credit - the total amount of loans in an economy เครดิต เงินกู้ทั้งหมด
a basis point - one hundredth of one per cent, used to express the interest rate on bonds, for example the bond interest rate was "50 basis points higher than last month" means "0.5 higher than last month"
savings deposit base
retail customers - small depositors like individuals, not businesses who use other banking services and who have a more complicated relationship with the bank ลูกค้ารายย่อย
primarily composed of retail customers - most of the customers are retail customers
riskier, higher yielding products - investors usually receive higher returns in exchange for higher risk
inconvenience - something that causes problems, difficulties, delays for you ความยากลำบาก อุปสรรค
Possible shift from time deposits to savings deposits?
One shift that may take place with today's falling rates is a shift from time deposits to savings deposits, as the greater liquidity offered by savings deposits outweigh the marginally higher interest rates offered for fixed accounts.At KBank, savings deposits now account for around 40% of total deposits, a proportion that could increase to 50% to 55% over the next several months.
liquidity - the
speed that an asset can be turned into cash (cash is 100% liquid, a
savings account a little less, a time deposit a lot less) สภาพคล่อง
X outweighs Y - X is more important than Y x มีความสำคัญกว่า y มาก
marginally higher - just a little bit higher สูงกว่าเีพียงเล็กน้อย
X outweighs Y - X is more important than Y x มีความสำคัญกว่า y มาก
marginally higher - just a little bit higher สูงกว่าเีพียงเล็กน้อย
(Source: Bangkok Post, business, 5/03/09, Bankers play down shifts from savings, SOMRUEDI BANCHONGDUANG, link)
