Thai banks have room to improve costs, loans in 2025: UOBKH

But loans extended to SMEs will continue to remain sluggish in quality.

Thai banks have room to further improve their credit costs and loans in 2025, according to UOB Kay Hian.

In 2025, except for TISCO Financial Group, many banks have guided for a lower range of credit cost targets compared to 2024.

The banking sector reduced credit cost by 11 basis points (bp) to 149bp in 2024. Only two banks reported higher credit costs year-on-year (YoY): Bangkok Bank and TISCO Financial Group.

Thai banks also expect to see positive loan growth in 2025, following loan contractions for several banks in 2024.

“Banks will continue to grow loan portfolios with a stringent lending policy due to the gradual economic recovery. The corporate loan segment showed a healthier credit quality,” UOB Kay Hian analyst Thanawat Thangchadakorn said.

However, loans extended to small and medium enterprises (SMEs) will remain sluggish in quality, Thangchadakorn said.

Of the banks, Kiatnakin Phatra Bank (KKP) also guided for flat loan growth or even slightly negative growth in 2025 due to “a high risk of price war from Chinese carmakers and the automobile industry,” Thangchadakorn noted in the report.

The banking sector is not expected to be significantly impacted by the financial relief measures announced by the Bank of Thailand (BOT).

Banks did guide that the measures— including “You Fight We Help”– will have some impact on lowering their lending yields. However, impact should be insignificant, according to UOBKH.

“As a result, banks expect to see better asset quality from these measures and solve the household debt problem.” Thangchadakorn said.