# Banking Sector Quarterly Report – Q2 2025 (Bank of Thailand)

- Link: https://www.thailand-business-news.com/banking/240237-banking-sector-quarterly-report-q2-2025-bank-of-thailand
- Published: 2025-09-02T15:38:00+07:00
- Author: Zhang Fang

The Thai banking system continues to demonstrate resilience, supported by strong
capital buffers, substantial loan loss provisions, and solid liquidity. In the second
quarter of 2025, loan growth across the banking system (including licensed banks
and their subsidiaries) declined at a moderated rate of -0.9% year-on-year.

### 📉 Loan Trends

 * **Overall loan growth** contracted by **-0.9% year-on-year**, but at a slower
   pace.
 * **Large corporate loans** expanded, while **SME and consumer loans** continued
   to shrink due to elevated credit risks.

### 📊 Credit Quality

 * **Non-performing loans (NPLs)** rose slightly to **554.9 billion Baht**, mainly
   from business loans.
 * **Consumer loan NPLs** declined across all portfolios.
 * **NPL ratio** remained stable at **2.91%**.
 * **Stage 2 loans** (significant credit risk) decreased to **6.88%**, thanks to
   better classification of restructured loans.

### 💰 Profitability & Provisions

 * **Profitability improved** quarter-on-quarter, largely due to seasonal dividend
   income.
 * **Provisioning expenses increased** to hedge against global trade policy risks.
 * **Net interest income declined** due to:
    - Interest rate cuts
    - Lower loan volumes
    - The “Khun Soo, Rao Chuay” program offering interest rate relief

### ⚠️ Risks & Monitoring

 * Continued need to monitor:
    - Tight financial conditions
    - Debt serviceability of vulnerable households and businesses
    - Impact of U.S. trade policies
    - Effectiveness of the “Khun Soo, Rao Chuay” support measures

### 📉 Debt Ratios & Sector Performance

 * **Household debt to GDP** fell due to slower debt accumulation.
 * **Corporate debt to GDP** also declined, driven by economic growth.
 * **Profitability year-on-year** dropped, despite gains in manufacturing exports.
 * **Tourism and services sectors** remained pressured by low foreign arrivals and
   weak housing demand.

**The banking system’s profitability improved from the previous quarter**, mainly
due to seasonal dividend income. However, provisioning expenses increased to buffer
against potential uncertainties arising from global trade policy risks. Meanwhile,
net interest income declined as a result of interest rate cuts, lower loan volumes,
and the implementation of the ‘Khun Soo, Rao Chuay’ program, which provided interest
rate reductions to borrowers.

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**Source** : [Banking Sector Quarterly Brief (Q2 2025)](https://www.bot.or.th/en/news-and-media/news/news-20250819-2.html)

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