Bank of Thailand Report: Commercial Bank Profits and Lending Contract in Q3 2025
BOT raises SME credit risk concerns as commercial bank profits fall 6.9% and lending shrinks for fifth consecutive quarter due to weak consumer demand.
Thai commercial bank profits and overall lending contracted in the third quarter of 2025 (Q3 2025), prompting the Bank of Thailand (BOT) to issue a caution over SME credit risk.
According to a BOT report, commercial banks' net profit dropped by 6.9% year-on-year, from 71 billion baht to 66 billion Baht, largely driven by a reduction in net interest income.
This reduction was attributed to a combination of shrinking loan portfolios, rate cuts implemented by banks, and debt relief measures.
Total commercial banking system credit (including affiliates) contracted by 1.0% in Q3 2025 compared to the same period last year. This marks the fifth consecutive quarter of negative loan growth.
The contraction was primarily fuelled by decreases in SME loans, which shrank by 4.0%, and consumer loans, reflecting continuously high credit risk. In contrast, large corporate loans saw only slight growth.
"The loan contraction has persisted for five consecutive quarters," stated Somchai Lertlarpwasin, assistant governor, Financial Institutions Policy Group at the BOT. "However, the rate of contraction is not as severe as the 3% dip seen during the 2009 'Hamburger Crisis.' This time, while the decline is shallower, it may be more prolonged."
While the banking system remains stable and sound—with a Capital Adequacy Ratio (CAR) of 21.3% and high liquidity—the BOT is closely monitoring loan quality.
The overall Non-Performing Loan (NPL) ratio (Stage 3) rose slightly to 2.94% of total loans, partly because the denominator (total loans) shrank. The outstanding NPL balance decreased to 544.0 billion Baht due to a slowdown in new NPL formation.
However, the ratio of Stage 2 loans (loans requiring close monitoring) increased to 7.24%, linked to qualitative reclassifications of some large corporate debtors.
Somchai highlighted that the BOT is paying particular attention to SME NPLs, where the proportion remains high.
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