Thailand’s banking system loans contract 2% in Q3

Loans to petrochemical, electronic, and automotive sectors fell.

Thailand’s banking system loans reported a 2% year-on-year contraction in Q3 2024, according to data from the Bank of Thailand (BOT).

The central bank attributed this to high levels of debt repayments, particularly from government and large corporations.

“Despite continued new lending to large corporations in the service, real estate, and trade sectors, as well as consumer loans for personal and mortgage lending, the loans expanded at a slower pace,” the BOT said in a statement posted on its website.

Loans to businesses particularly faced competitiveness challenges and continued to contract, notably loans to the petrochemical, electronic, and automotive sectors.

The banking system’s non-performing loans (NPL) rose to THB553.4b. NPL ratio is 2.97%.

“This increase was partly attributed to a decline in loan base and higher NPLs from business and consumer loans,” the BOT said.

The ratio of loans with significant credit risk is 6.86%, rising from the previous quarter.

In contrast, the banking system’s profitability in the third quarter of 2024 improved from the previous year, even as net interest income declined.

“Nonetheless, there remains a need to monitor the debt serviceability of SMEs and certain households with slower income recovery and elevated debt burden, as well as businesses affected by structural issues and declining competitiveness,” the BOT said,

“These could cause a gradual increase in NPL but remain well-manageable with no immediate risk of an NPL cliff,” the central bank added.

Overall corporate profitability remained favorable, particularly in the manufacturing sector, it added.