The Bank of Thailand published its Banking Sector Quarterly Brief, assessing the Thai banking system as resilient on the back of robust capital, loan loss provisions and liquidity, while highlighting a continued contraction in credit. In the fourth quarter of 2025, overall loan growth across licensed banks and their subsidiaries fell 1.1% year-on-year, and banking sector profitability in 2025 declined from the previous year. The loan contraction was driven by continued declines in SME and consumer lending amid heightened credit risks, while lending to large corporates recorded a slight contraction partly reflecting weaker demand. Gross non-performing loans (NPLs or Stage 3) fell to THB 536.0 billion in the fourth quarter of 2025, lowering the NPL ratio to 2.84%, while loans with a significant increase in credit risk (Stage 2) decreased to 7.07%, primarily reflecting repayments under restructured loan arrangements; commercial banks continued to provide borrower assistance. The assessment flagged the need for close monitoring of continued tight financial conditions and SME and household debt serviceability amid below-potential and uneven economic growth and structural challenges. Targeted financial measures were cited as helping alleviate debt burdens for vulnerable businesses and households, while the household debt-to-GDP ratio was unchanged in the third quarter of 2025 and household lending continued to contract at a similar pace.

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