Thailand's Major Banks Face Rising Asset Risks

Thailand's six major banks, including Bangkok Bank (BBL), Krungthai Bank (KTB), Kasikornbank (KBank), SCB X (the holding company of Siam Commercial Bank), Bank of Ayudhya (Krungsri) and TMBThanachart Bank (ttb), are likely to face rising asset risks over the next several years due to a continued increase in impaired loans. This economic slowdown will weaken debt repayment capacity at these banks this year, particularly affecting retail and small and medium-sized enterprise (SME) borrowers who have yet to recover from pandemic-related disruptions. Fitch Ratings Thailand's report highlights the potential vulnerabilities in the banks' asset quality, particularly those with already elevated impaired loan levels, citing an average impaired loan ratio of 3.7% in March 2025.

Key Takeaways:

• Fitch Ratings Thailand expects Thailand's economic slowdown to weaken debt repayment capacity at the country's six major banks this year, primarily impacting retail and SME borrowers.
• The average impaired loan ratio of the six major banks has inched up from 3.5% at the end of 2023 to 3.6% at the end of 2024 and 3.7% in March 2025.
• Fitch assigned an equal asset quality score of bbb- to all DSIBs, but SCB X and Krungsri carry a negative outlook, with impaired loan ratios likely to remain above 4%.
• BBL's stronger risk profile score of bbb reflects its broader geographical diversification, higher-quality corporate client base, and conservative risk management practices.
• SCB X's risk profile score of bbb is under negative outlook due to potential challenges in improving key asset quality metrics.

Statistics:

• The average impaired loan ratio of Thailand's six major banks is 3.7%, as of March 2025.
• Credit risk represents 87-90% of total exposure for the major Thai banks.
• Market risks remain negligible at less than 3% for the major Thai banks.

Sources:

• Fitch Ratings Thailand, Report: "Peer credit analysis: Major Thai banks" published on Friday.