The Thai banking system remains resilient with robust levels of capital, loan loss provisions, and liquidity. In the second quarter of 2026, overall loan growth in the banking system (licensed banks and their subsidiaries) grew by 2.0% year-on-year, driven primarily by lending to large corporate in line with increased demand for working capital to absorb the impact of higher energy and raw material costs. Meanwhile, SMEs and consumer loans continued to contract, reflecting persistently high credit risks. On loan quality, NPL (Stage 3¹) declined to 534.8 billion baht in the second quarter of 2026, mainly reflecting banks’ intensified efforts to manage problem loans. As a result, The NPL ratio remained stable at 2.82%, close to the level observed at the onset of the conflict in the Middle East. Stage 2 loans² declined to 6.78%, partly due to the migration of vulnerable borrowers into NPL status, while some borrowers previously classified as significant increase in credit risk (SICR) showed improved credit quality. At the same time, commercial banks have continued to provide support through pre-emptive debt restructuring, which has helped contain NPL formation. In terms of financial performance, net profits of the commercial banking system increased from the same period last year, driven mainly by higher fair value gains on financial instruments and increased securities brokerage fee income. This was complemented by lower provisioning expenses, following relatively substantial provisioning in previous periods, as well as improved operating cost management. These factors helped offset the decline in net interest income following lending rate reductions in line with the policy rate direction and continued borrower assistance.

Going forward, ongoing uncertainty related to the conflict in the Middle East and the uneven recovery of the Thai economy could continue to weigh on borrowers’ debt-servicing capacity, particularly among vulnerable SMEs and households facing income volatility and higher living costs. In this regard, close monitoring of commercial banks’ asset quality remains warranted. Nevertheless, government measures to alleviate debt burdens and continued liquidity support from financial institutions are expected to help cushion the impact on businesses and households.

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)