BANGKOK, Thailand – The Bank of Thailand (BOT) reported that the banking system remains stable, supported by strong capital reserves, liquidity, and loan-loss provisions, despite a 0.4% contraction in credit in Q4 2024.
Suwarnee Jetsadasak, Assistant Governor for Financial Institutions Supervision at BOT, stated that total banking sector loans, including subsidiaries, shrank by 0.4% year-on-year in the fourth quarter. This marked an improvement from the 2.0% decline in the previous quarter, mainly due to growth in large corporate lending. However, SME loans continued to decline, and consumer credit weakened, particularly in auto loans, which faced structural challenges and slow income recovery among vulnerable groups.
The non-performing loan (NPL) ratio fell to 2.78%, with total NPLs dropping to 552.1 billion baht. This decline was driven by improved debt management, loan restructuring, and enhanced credit risk assessment for corporate lending. Borrowers who successfully restructured their loans moved into Stage 2 classification, which now accounts for 6.98% of total loans.
For the full year 2024, the banking sector’s performance improved, supported by higher non-interest income from financial instrument valuation, net interest income growth, and reduced provisioning costs.
Despite these positive trends, BOT cautioned that risks remain, particularly for SMEs and households with slow income recovery and high debt burdens. Structural challenges in key industries and declining competitiveness are also concerns. Debt relief programs, including “Khun Soo Rao Chuay,” are under review for effectiveness.
Household debt-to-GDP declined in Q3 2024, reflecting slower household credit growth. Corporate debt-to-GDP also decreased due to contracting loans and lower bond issuance. Profitability in some sectors, especially manufacturing, weakened compared to the previous year. However, tourism provided partial economic support, offering a bright spot amid ongoing financial uncertainties. (NNT)
