The Bank of Thailand published its quarterly assessment of banking sector conditions, describing the system as resilient with robust capital, loan loss provisions, and liquidity. In the second quarter of 2025, system-wide loan growth (licensed banks and their subsidiaries) contracted at a slower pace of -0.9% year-on-year, with large corporate lending still expanding while SME and consumer lending continued to decline amid elevated credit risk. Gross non-performing loans (NPLs, stage 3) rose slightly to THB 554.9bn, mainly from business loans, while consumer-loan NPLs fell across portfolios, leaving the NPL ratio stable at 2.91%. Stage 2 loans (significant increase in credit risk) declined across most portfolios, attributed mainly to improved classification for borrowers who resumed repayment under debt-restructuring conditions, bringing the Stage 2 ratio down to 6.88%. Profitability improved versus the prior quarter on seasonal dividend income, but provisioning expenses increased to buffer global trade policy uncertainties, and net interest income fell due to rate cuts, lower loan volumes, and the ‘Khun Soo, Rao Chuay’ interest-reduction programme; the Bank also flagged the need to monitor tight financial conditions, debt serviceability for vulnerable borrowers, potential impacts from U.S. trade policies, and the effectiveness of the programme.
Bank of Thailand 2025-08-19
Bank of Thailand’s banking sector brief shows NPL ratio stable at 2.91% and Stage 2 ratio down to 6.88% in Q2 2025
The Bank of Thailand's quarterly assessment reports a resilient banking sector with strong capital, loan loss provisions, and liquidity. Loan growth contracted by -0.9% year-on-year in Q2 2025, with large corporate lending expanding while SME and consumer lending declined. Gross non-performing loans rose slightly to THB 554.9bn, but the NPL ratio remained stable at 2.91%, and profitability improved despite higher provisioning expenses and reduced net interest income.