Bank loans are projected to see a modest increase of 0.6%, reaching 14.8 trillion baht this year, recovering from a contraction last year. This growth is primarily driven by large businesses, while small and medium-sized enterprises (SMEs) and retail borrowers continue to face challenges, according to Kasikorn Research Center (K-Research).
Kanjana Chockpisansin, the head of research for banking and finance at K-Research, indicated that a rebound in bank loans is expected in the second half of this year, facilitated by a downward trend in interest rates, particularly with large corporate loans being a significant contributor.
K-Research forecasts that bank loans will increase by 0.6% to 14.8 trillion baht this year, with loans to large corporations anticipated to rise by 3%. However, loans to both SMEs and retail borrowers are expected to decline by 1% each.
Overall, business loans, which encompass lending to companies of all sizes, are likely to drop by 1.5% this year. In 2024, bank loans fell by 0.4%, marking the first annual decline since 2010.
“Bank loans have shown slight recovery, mostly for large companies, while credit access for SMEs continues to struggle,” Ms. Kanjana told the Bangkok Post.
The household debt-to-GDP ratio stands at 89% and is expected to take time to adjust to a more sustainable level of 80%, she added.
The non-performing loan (NPL) ratio may see a slight increase this year due to ongoing economic pressures. K-Research anticipates the NPL ratio for total outstanding loans to fall between 2.65% and 2.85% this year, compared to 2.7% by the end of 2024.
Additionally, the Bank of Thailand’s adjustments to loan-to-value (LTV) regulations are expected to stimulate the property sector, potentially increasing mortgage loans. K-Research had initially forecasted mortgage growth of 0.5% this year, but with the relaxation of LTV rules, property loans are projected to rise by 0.6% to 0.7% in 2025, noted Ms. Kanjana.
The recent cuts in bank loan interest rates, following a policy rate reduction by the central bank in February, are likely to benefit 56% of business and retail loans, primarily affecting new loans. K-Research believes the central bank has room for another rate cut in the latter half of 2025, she stated.
According to Krungsri Securities (KSS), commercial bank loans contracted by 0.2% month-on-month in February, largely due to a decrease in government loans, although business loans showed an increase. Loans to SMEs and retail borrowers remained stable.
“Banks continue to adopt a cautious approach to lending amid an uncertain economic recovery,” remarked Chayaporn Tocharoen, an analyst at KSS.
Compared to the end of 2024, banking sector loans have declined by 0.8% year-to-date, with Bangkok Bank showing the strongest performance at a 1.1% increase, followed by Siam Commercial Bank (0.7%) and Tisco Bank (0.2%). Banks experiencing loan contractions include Kiatnakin Phatra Bank (-0.9% year-to-date), TMBThanachart Bank (-1.7%), Krungthai Bank (-2.1%), and Kasikornbank (-2.4%).
In terms of deposits, commercial banks reported a 0.1% month-on-month increase in February, with year-to-date banking sector deposits also rising by 0.1%. The loan-to-deposit ratio for February stood at 85.8%, down from 86.1% the previous month.
