Thai Q3 loans contract on softer SME and consumer demand

Thai banks saw lower net interest income on less lending and interest rate reductions.

Loan growth in Thailand’s banking system dipped 1% year-on-year (YoY) in Q3 2025, according to data from the Bank of Thailand (BOT).

The contraction reflected continued declines in loans to consumers and small and medium enterprises (SMEs), the central bank said. This is consistent with heightened credit risks in these segments.

Thai banks are expected to report a lower loan growth in 2025 compared to the previous year and are likely to prioritize asset quality and clean loan portfolios in 2026, according to a separate report by S&P in October 2025.

In contrast, lending to large corporations recorded a slight expansion despite weaker loan demand and continued debt repayment.

Nonperforming loan (NPL) ratio rose to 2.94%, which the BOT said is due to “the contraction in the loan base.”

Bank profitability “declined relative to the same period last year,” the BOT said. It was blamed primarily on lower net interest income following the contraction in lending and interest rate reductions applied to borrowers, both through bank’s own adjustments and under the ‘Khun Soo, Rao Chuay’ program.

The BOT said that the “Khun Soo, Rao Chuay” program has helped alleviate the debt burden of SMEs and vulnerable households.