Thai Banks face 3.7% YoY impaired loans rise in 2025

Low unemployment and declining interest rates are expected to help pay back debts.

Thailand’s banking sector is expected to remain weak as the impaired-loan ratio is forecasted to rise slightly to 3.7% year on year in 2025, according to a Fitch Ratings report.

The report noted that pressures are mainly in the small and medium-sized enterprises client segment, which had an impaired-loan ratio of 7.9% in the first half of the year.

Whilst Fitch predicts gross domestic product growth will slow from 2.5% in 2024 to 2.2% in 2025, low unemployment and declining interest rates are expected to help pay back debts.

Furthermore, banks have been reducing riskier exposures and are retaining sufficient capacity to write off impaired loans.

Looking forward to 2026, Fitch expects the market to remain steady and GDP to grow by 1.9%.