Although the state-owned Government Savings Bank (GSB) has partly passed on the central bank's higher rate by raising its rate a quarter-point on fixed deposits, commercial banks have not followed suit.
Krungthai Bank (KTB) has no plans to lift either deposit or lending rates, despite GSB's move, mainly because the two institutions have different costs, said president Payong Srivanich.
Unlike other state-owned banks, KTB is considered a commercial bank, required to contribute 0.47% of its deposit base to the Financial Institutions Development Fund (FIDF) and Deposit Protection Agency, well above the 0.25% paid by specialised financial institutions for the Specialized Financial Institutions Fund (SFIF), he said.
A lending rate hike would hurt the bank's customers, and KTB wants to shield them from the impact as long as possible, Mr Payong said.
His remarks came after GSB announced on Thursday that it would increase fixed deposits rates by 0.25 percentage points for fixed-deposits accounts across the board, effective from Monday, but keep lending rates unchanged.
The state-owned bank's move follows the Bank of Thailand's rate hike of 25 basis points this week, the first increase since 2011.
Mr Payong said KTB could possibly see deposit outflows after some banks raise deposit rates, but this is less of a concern due to the bank's liquidity surplus.
On the likelihood of the central bank raising rates further, he said KTB must consider the conditions at the time.
He is bullish on KTB's business prospects, predicting that profits in 2019 will grow at a faster pace than this year, despite a costly investment plan.
The bank aims for lending growth of 5% and non-performing loans (NPLs) lower than 100 billion baht next year.
KTB's bad loans amounting to 110 billion baht represent about 4% of loans outstanding.
Mr Payong said the bank will keep the NPL coverage ratio at 120-130% in 2019, versus just over 120% at the moment.
Bangkok Bank executive chairman Deja Tulananda sounded a more cautious note.
He said the bank will have discussions with other commercial banks before making any decision as to whether to follow in GSB's footsteps.
