The Bank of Thailand published its quarterly banking sector assessment, finding the Thai banking system remains resilient with robust capital, loan loss provisions and liquidity, and that profitability in 2024 improved year on year. The assessment flags continued areas for close monitoring, including the debt serviceability of SMEs and some households with slow income recovery and high debt burdens, structurally challenged businesses with declining competitiveness, and the effectiveness of support measures under the “Khun Soo, Rao Chuay” program. In the fourth quarter of 2024, loan growth across licensed banks and subsidiaries contracted by 0.4% year on year, improving from a 2.0% contraction in the prior quarter, supported by loan expansion among large corporates while SME loan contraction eased. Consumer lending continued to fall, particularly auto loans, which were linked to structural issues and slow income recovery among vulnerable segments. Gross non-performing loans (stage 3) declined to THB 552.1 billion, bringing the NPL ratio down to 2.78%, mainly reflecting lower business-loan NPLs alongside banks’ portfolio management, ongoing debt assistance, and reclassification of some restructured borrowers that resumed repayments into stage 2. Stage 2 (significant increase in credit risk) rose to 6.98%, partly driven by qualitative asset-classification criteria for business loans. Household debt to GDP fell in the third quarter of 2024 from the previous quarter due to slower household debt growth, while corporate debt to GDP declined amid contractions in loans and debt securities. Corporate profitability decreased from the prior year, particularly in manufacturing, despite positive contributions from tourism.

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