Thai bank earnings set to weaken in challenging 2026

Net interest margins will compress, and loan growth will be subdued.

Thai banks’ profitability is expected to weaken amidst a “challenging” 2026, according to CreditSights, a Fitch Solutions service.

Net interest income (NII) is likely to contract from net interest margin (NIM) compression and subdued loan growth during the year, the report said.

Trading and investment income are also likely to soften without rate cut tailwinds and amidst continued market volatility, it added. The Thai banks’ recent Q1 2026 results have also yet to fully reflect the impact of the Middle East conflict,

“We expect credit costs to remain elevated; fee income and loan growth are also likely to slow from a decent Q1, as market volatility weighs on investment appetite and a weaker FY2026 backdrop increases banks’ risk aversion,” CreditSights wrote in an April 2026 report, noting that capital remains the key support.

Both Siam Commercial Bank (SCB) and Bangkok Bank saw their net profits decline year-on-year in Q1, on weaker topline and elevated provisions.

Kasikornbank (KBank) reported net profit growth, but this was due to a THB1.45b on-off investment gain. Without it, KBank’s results would have also been down 3%.

NII fell 9.8% to 13.7% across the board, with the banks showing NIM compression and muted loan growth. NIM pressure should persist in Q2, according to CreditSights.

Common equity tier 1 (CET1) ratios declined by 0.4 percentage points (ppt) to 0.9 ppt during the quarter compared to Q4 2025. Ratios remained strong at 16.4% to 17.6%, providing buffers against elevated credit costs and macro uncertainty, said CreditSights.