Thai banks’ lending dip 0.4% in Q4 2024

Central bank says there is need to monitor SMEs and households’ ability to repay debt

Thai banks registered a 0.4% year-on-year (YoY) loan contraction in Q4 2024— a slower decline than the 2% contraction in Q3, central bank data showed.

The Bank of Thailand (BOT) warned of the need to monitor small and medium enterprises (SMEs) and certain households’ ability to repay their debt.

In particular, the central bank named households facing slower income recovery and high debt burdens; and businesses affected by structural issues and declining competitiveness as entities that needed to be monitored.

Loan expansion amongst corporates helped drive the improvement, whilst loans to small and medium enterprises (SME 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 Bank of Thailand (BOT) said in a statement posted on its website on 18 February 2025.

The Thailand banking system’s non-performing loans (NPL) for the period decreased by THB552.1b, reducing the NPL ratio to 2.78%.

The decline in bad loans was attributed to business loans, and partly 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.

Whilst loans declined, the banking system’s profitability in 2024 improved compared to the previous year, according to the BOT. This was driven by higher non-interest income and net interest income.

Lower provisioning expenses following elevated provisioning in 2023 also lifted profitability.

The household debt to GDP ratio in Q3 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, the central bank said.

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