Thailand's bank loans projected to grow 0.6% this year

Bank loans in Thailand are expected to increase by 0.6% this year, reaching 14.8 trillion baht. This marks a recovery after a contraction in 2024. The growth is mainly driven by large businesses. However, small and medium-sized enterprises (SMEs) and retail borrowers are still facing challenges. Kanjana Chockpisansin from Kasikorn Research Center (K-Research) noted that bank loans are likely to improve in the second half of 2025. This rebound is anticipated as interest rates decline. Loans to large businesses are predicted to rise by 3%, while loans to SMEs and retail borrowers may decrease by 1%. The overall business loan sector is projected to fall by 1.5% this year. Last year, the banking sector saw a 0.4% decline, marking the first annual drop since 2010. Currently, household debt stands at 89% of GDP and is expected to take time to reach a healthier level of 80%. K-Research also highlighted that the non-performing loan (NPL) ratio might rise slightly this year due to ongoing economic issues. The NPLs are expected to be between 2.65% and 2.85%, compared to 2.7% at the end of 2024. The easing of loan-to-value (LTV) rules from the Bank of Thailand is projected to boost mortgage lending, which K-Research forecasts to grow by 0.6% to 0.7% this year. Recent interest rate cuts are likely to benefit 56% of new business and retail loans. K-Research suggests that the central bank may have the opportunity for another rate cut later in the year. In February, commercial bank loans fell by 0.2% month-on-month due to reduced government loans, although business loans did see some growth. While banks are cautious about lending due to economic uncertainty, some banks reported growth in loans, such as Bangkok Bank and Siam Commercial Bank. Deposits in February increased slightly by 0.1% month-on-month. The loan-to-deposit ratio also dropped from 86.1% to 85.8%. Overall, the banking sector has seen a 0.8% decline in loans since the end of 2024.