Thai Credit Falls for Sixth Straight Quarter

Credit across Thailand’s banking system has contracted for a sixth consecutive quarter, with overall lending falling by 1.1% in the fourth quarter of 2025, according to the Bank of Thailand (BoT). The decline was driven largely by continued weakness in SME and consumer loans. SME credit has now shrunk for 14 straight quarters, underscoring ongoing vulnerability in the sector.

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Large corporations also recorded a slight contraction of 0.2%, attributed mainly to lower loan demand and a shift towards bond issuance instead of traditional bank borrowing. Despite these trends, the banking system remained financially stable in Q4 2025. However, liquidity has tightened in some sectors and debt repayment capacity remains weak among certain SME and household groups.

The BoT noted that Thailand’s economy continues to grow below its potential and remains uneven. Structural challenges, including declining competitiveness, are affecting income growth and financial stability. The central bank has implemented targeted financial measures to ease debt burdens for businesses and households, though overall conditions remain challenging.

As of Q4 2025, the banking sector’s non-performing loan (NPL) ratio declined slightly to 2.84% from 2.94%, with improvements seen in both business and consumer NPLs. Authorities cautioned that vulnerable debtor groups, particularly SMEs and households, still require close monitoring. Debt restructuring and loan modification measures have helped prevent wider financial instability.

Bank profitability also weakened in 2025, with total net profits falling to around 500 billion baht from the previous year’s record high. The decline was attributed to lower interest income from reduced rates and shrinking loan bases, as well as increased loan restructuring. Some losses were offset by income from investments and wealth management services.

The BoT’s SME Credit Boost programme aims to inject approximately 100 billion baht into the system over two years, targeting businesses with strong potential. Banks are setting modest growth targets for 2026, with lending direction dependent on domestic and global economic recovery, exports and investment activity. The BoT is prioritising support for viable businesses aligned with Thailand’s “Reinvent Thailand” strategy, including agribusiness, automotive, high-tech electronics and logistics.

The Nation reported that in the housing market, the BoT is considering easing loan-to-value (LTV) regulations due to expire in June 2026 to support recovery. While high-priced homes continue to attract demand, growth in the second-hand housing market reflects consumers opting for renovations rather than new purchases. Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said the government would advance policies to boost growth, including infrastructure investment and the “Thailand Fast Pass” initiative to accelerate investment in key industries.

Cover picture courtesy of The Nation

Key Takeaways

• Credit fell 1.1% in Q4 2025, marking six consecutive quarters of contraction, with SME loans down for 14 quarters.

• Large corporate lending declined 0.2% as firms shifted towards bond issuance amid weak loan demand.

• The BoT plans targeted support, including a 100 billion baht SME programme and possible LTV easing before June 2026.

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Adapted by ASEAN Now Nation 19 Feb 2026