Thai Banking Industry Faces Rising Non-Performing Loan Ratio Amid Subdued Economic Growth

Strategic Insights -

Thai banking industry faces a worrying trend of rising non-performing loan (NPL) ratio, with Fitch Ratings projecting it to increase to 3.7% in 2025 from 3.4% this year, before stabilizing in 2026. The NPL ratio in the small and medium-sized enterprise (SME) segment is particularly concerning, with an impaired-loan ratio reaching 7.9% in the first half of 2025, up from 7.2% at the end of last year. Despite this, the sector is expected to have adequate capacity to address bad debts through write-offs, while continued low unemployment and declining interest rates are expected to support borrowers' repayment abilities.

Key Takeaways:

  • The non-performing loan ratio in Thailand's banking industry is expected to increase to 3.7% in 2025, from 3.4% this year.
  • The impaired-loan ratio in the SME segment reached 7.9% in the first half of 2025, up from 7.2% at the end of last year.
  • Thai economic growth is expected to remain subdued, with GDP expanding by 2.2% in 2025, and slowing further to 1.9% in 2026.
  • Domestic banks have proactively reduced exposure to higher-risk clients.
  • The sector is expected to have adequate capacity to address bad debts through write-offs.
  • SCB X Public Company Limited is expected to report THB 29,748 million in non-interest income in 3Q25, representing a drop of 8.85% YoY.
  • Bangkok Bank, Kasikornbank, and Krung Thai Bank are expected to face similar trends, with drops of 8.02%, 8.83%, and 10.58% respectively.

Statistics:

  • Non-performing loan ratio in 2025: 3.7%
  • Non-performing loan ratio in 2024: 3.4%
  • Impaired-loan ratio in SME segment (first half of 2025): 7.9%
  • Impaired-loan ratio in SME segment (end of 2024): 7.2%
  • Thai GDP growth in 2025: 2.2%
  • Thai GDP growth in 2026: 1.9%
  • Non-interest income of SCB X Public Company Limited (3Q25): THB 29,748 million
  • Drop in non-interest income of SCB X Public Company Limited (3Q25): 8.85% YoY

Sources:

  • Fitch Ratings
  • LSEG consensus
  • Global Data Point
  • SyndiGate Media Inc.