The Thai banking system remains resilient with robust levels of capital, loan loss provisions, and liquidity. In the third quarter of 2025, overall loan growth in the banking system (licensed banks and their subsidiaries) continued to contract by 1.0% year-on-year, broadly in line with the previous quarter. The contraction reflected continued declines in SMEs and consumer loans, consistent with heightened credit risks. Meanwhile, lending to large corporates recorded a slight expansion amid weaker loan demand and continued debt repayments. Overall loan quality (NPL or Stage 3)¹ remained broadly stable, as new NPL formation moderated notably. As a result, outstanding Stage 3 loans declined to 544.0 billion Baht in the third quarter of 2025. However, the NPL ratio increased to 2.94%, partly due to the contraction in the loan base. Stage 2 loans² increased, reflecting qualitative loan classification based on borrower-specific factors among a few large corporates and, to some extent, improved loan classification from Stage 3. Consequently, the Stage 2 ratio increased to 7.24%. Nevertheless, commercial banks continued to provide assistance to borrowers and manage their loan portfolios. Bank profitability declined relative to the same period last year, primarily due to 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.

Nonetheless, it is necessary to closely monitor the prevailing tight financial conditions and the debt serviceability of SMEs and households amid a slowing economic environment, partly affected by U.S. tariff measures and subdued income recovery. The “Khun Soo, Rao Chuay” program has helped alleviate the debt burden of SMEs and vulnerable households. In the second quarter of 2025, the household debt to GDP ratio declined from the previous quarter, reflecting a marked slowdown in household credit expansion. Corporate debt to GDP ratio also decreased, consistent with a reduction in new borrowing. Overall corporate profitability weakened across most business sectors compared to the same period last year, particularly in real estate, in line with subdued housing market conditions. 

^{1 Gross non-performing loans (NPL or stage 3)}

^{2 The ratio of loans with a significant increase in credit risk (SICR or stage 2)}