State-owned Government Savings Bank (GSB) will hold an executive board meeting next Tuesday to consider passing on the central bank's 25-basis-point rate cut.
The three factors of financial liquidity, market competition and financial cost will guide the decision-making, said GSB president and chief executive Chatchai Payuhanaveechai.
GSB's loan-to-deposit ratio stands at 90%, so the remaining 10%, amounting to roughly 200 billion baht, is liquidity surplus, Mr Chatchai said.
The liquidity of the overall banking sector is abundant at 3-4 trillion baht.
"The policy rate has not been a benchmark rate for market rates for a while," he said. "Banks would prefer adjusting the premium on lending rates to prime rates."
The industry's deposit rate had increased for special savings accounts before the Bank of Thailand's rate cut last week, so their financial costs are quite high.
The central bank surprised the market by following the lead of major counterparts with a 25-basis-point rate cut, the first decrease since 2015, in an effort to boost the economy.
The Monetary Policy Committee voted 5-2 to cut the benchmark rate from 1.75% to 1.50%, reversing the rate-setting panel's increase last December.
Specialised financial institutions will hold a meeting soon to discuss the issue. GH Bank, the state-owned mortgage lender, is expected to spearhead the rate lowering this round, said a source familiar with the matter.
Predee Daochai, chairman of the Thai Bankers' Association and president of Kasikornbank, said KBank and others will consider all economic data before making decisions about a rate move.
Banks earlier forecast that the central bank would maintain the policy rate unchanged at 1.75% at last week's meeting.
Chartsiri Sophonpanich, president of Bangkok Bank, said his bank will take time to mull whether it will pass on the central bank's rate reduction.
Siam Commercial Bank chief executive Arthid Nanthawithaya said his bank, akin to industry peers, is considering the question.
Praphan Anupongongarch, Thanachart Bank's president and chief executive, said TBank is estimating the industry's interest rate trends because financial liquidity is quite high.
TBank's loan growth target of 7% this year is achievable after lending expanded 3-4% from the end of last year in the first half.
Yuttachai Teyarachakul, managing director and country head of personal financial services at UOB Thai, said his bank is preparing to follow in the footsteps of large commercial banks if they cut savings and lending rates.
