# Thai Banking System Quarterly Update: Robust Performance with Solid Capital and Liquidity

- Link: https://www.thailand-business-news.com/banking/196594-thai-banking-system-quarterly-update-robust-performance-with-solid-capital-and-liquidity
- Published: 2025-02-21T12:39:18+07:00
- Author: Nguyen Trang

**The Thai banking system is resilient with strong capital and liquidity levels.
Profitability improved in 2024 but there are concerns about debt serviceability 
for SMEs and households, and business competitiveness.**

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Summary

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 * The Thai banking system remains resilient with robust levels of capital, loan
   loss provisions, and liquidity. 
 * The banking system’s profitability in 2024 improved from the previous year.
 * Nonetheless, there remains a need to monitor the debt serviceability of SMEs 
   and certain households facing slower income recovery and high debt burdens, businesses
   affected by structural issues and declining competitiveness, as well as the effectiveness
   of the assistance measures under the “Khun Soo, Rao Chuay” program. 

The Thai banking system remains resilient with robust levels of capital, loan loss
provisions, and liquidity. In the fourth quarter of 2024, loan growth in the banking
system (licensed banks and their subsidiaries) contracted by 0.4% year-on-year, 
an improvement from the 2.0% contraction in the previous quarter. This was driven
by loan expansion among large corporates, while SMEs loans contracted at a slower
pace.

Consumer loans continued to decline, particularly auto loans, which were affected
by structural issues and slow income recovery among vulnerable segments. The banking
system’s NPL[1] in the fourth quarter of 2024 decreased to 552.1 billion Baht, reducing
the NPL ratio to 2.78%. This decline was primarily attributed to business loans,
partly driven by banks’ loan portfolio management, ongoing debt assistance, and 
the reclassification of certain NPL debtors who resumed repayments under debt restructuring
obligations to stage 2 loans.[2]  In addition, qualitative criteria in asset classification
of business loans contributed to an increase in stage 2 loans, which rose to 6.98%.
The banking system’s profitability in 2024 improved from the previous year, mainly
driven by higher non-interest income (mainly from FVTPL) and net interest income,
coupled with lower provisioning expenses following elevated provisioning in the 
previous year.

Nonetheless, there remains a need to monitor the debt serviceability of SMEs and
certain households facing slower income recovery and high debt burdens, businesses
affected by structural issues and declining competitiveness, as well as the effectiveness
of the assistance measures under the “Khun Soo, Rao Chuay” program.

The household debt to GDP ratio in the third quarter of 2024 decreased from the 
previous quarter, driven by a slowdown in household debt. Meanwhile, the corporate
debt to GDP ratio decreased due to contractions in loans and debt securities. Overall
corporate profitability decreased from the previous year, particularly in the manufacturing
sector, despite positive contributions from the tourism sector.

[1] Gross non-performing loans (NPL or stage 3)
[2] The ratio of loans with a significant
increase in credit risk (SICR or stage 2)

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**Source** : [https://www.bot.or.th/en/news-and-media/news/news-20250218.html](https://www.bot.or.th/en/news-and-media/news/news-20250218.html?rand=113190)