Thai banking sector remains resilient despite loan contraction, profit drop in Q4

BANGKOK, Feb. 17 (Xinhua) -- Thailand's banking sector remained resilient with high levels of capital, loan loss provisions, and liquidity in the final quarter of 2025, despite declines in overall lending and profits, the central bank said on Tuesday.

According to the Bank of Thailand, total commercial bank loans shrank for the sixth straight quarter, down 1.1 percent year-on-year in the October-December period, relatively stable compared to the previous quarter's 1 percent decrease.

The central bank attributed the contraction to small and medium-sized enterprises (SMEs) and consumer loan portfolios, on the back of persistent high credit risks, while corporate lending also fell slightly, reflecting reduced demand amid a slowing economy.

The sector's gross non-performing loan ratio stood at 2.84 percent in the fourth quarter, down from 2.94 percent in the previous three months, said the central bank's Assistant Governor Somchai Lertlarpwasin.

Net profit in the Southeast Asian country's banking sector declined 13.5 percent in the last three months of 2025 from a year earlier, driven by lower net interest income as a result of interest rate reductions and borrower-assistance measures, the central bank said in a statement.

However, an increase in non-interest income and investments, along with lower provisioning expenses, partially offset the impact on profits, the statement said.

Looking ahead, the central bank emphasized the need to monitor tight financial conditions and debt servicing capabilities among vulnerable groups, particularly SMEs and households, as the Thai economy continues to grow below its potential, with an uneven recovery and structural headwinds affecting income. ■