Thai banks’ profits improve in Q3, but bad loans also rose

Authorities to monitor debt serviceability of SMEs and households.

Thai banks saw profitability improve in the third quarter of 2023, although bad loans also logged an increase.

The banking system’s gross non-performing loans (NPL) rose slightly to THB494.6b, equivalent to an NPL ratio of 2.7%. The ratio of loans with significant increase in credit risk decreased to 5.84% during the same quarter, from 6.08% in Q2.

The higher net interest income outweighed higher costs of funds and rising deposit rates and expenses, driving profitability, the Bank of Thailand (BOT) said in a report.

However, compared to Q2, net profit was much lower. BOT blamed this on the seasonal dividend income, and losses in the sale of derivatives.

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Authorities also warned of the need to monitor the debt serviceability of small and medium enterprises (SMEs) as well as some vulnerable households with slow income recovery. 

“Overall corporate profitability was stable, with a slight improvement in the chemical manufacturing sector in contrast to the performance of other manufacturing sectors. However, the profitability of tourism-related sectors experienced a negative impact from the low season,” the BOT reported.