The Bank of Thailand announced that the banking sector remains robust with strong capital adequacy, loan-loss provisions, and liquidity as of the third quarter of 2024.

However, loan growth contracted by 2% year-on-year due to high debt repayments from the government and large corporations.

While new lending continued in the service, real estate, and trade sectors, as well as consumer loans for personal and mortgage purposes, overall loan expansion slowed down.

Amid this, loans to sectors like petrochemicals, electronics, and automotive, which face competitiveness challenges, continued to decline.

The gross non-performing loans (NPLs) for the third quarter rose to 553 billion baht, reflecting an NPL ratio of 2.97%.

This was partially due to a shrinking loan base and an increase in troubled business and consumer loans.

Commercial banks have actively managed loan portfolios and supported debtors, resulting in profitability growth in the third quarter.

This growth was mainly due to higher fair value gains, although there was a decrease in net interest income.

Compared to the previous quarter, net profit dropped due to reduced seasonal dividend income, despite lower provisioning expenses.

The central bank highlighted the importance of monitoring small businesses and households facing income recovery challenges and high debt burdens, as they might contribute to a gradual increase in NPLs.

However, there is no immediate risk of a significant NPL surge.

The household debt-to-GDP ratio slightly decreased in the second quarter as credit expansion slowed down.

Similarly, the corporate debt-to-GDP ratio declined due to reduced loans and debt securities issuance.