In 2024, Thailand's banking sector witnessed a 0.4% year-on-year reduction in total loans, marking the most substantial decline since 2009. This downturn follows a 0.3% contraction in 2023, as reported by the Bank of Thailand (BoT).

The primary contributors to this contraction were decreases in loans to small and medium-sized enterprises (SMEs) and retail customers.

Specifically, SME loans decreased by 5%, auto leasing loans by 9.9%, and credit card loans by 2.3%.

Personal loan growth decelerated to 1.3% from 3.7% in the previous year, while mortgage loans saw a modest increase of 0.3%.

In contrast, corporate loans experienced a 3.4% growth year-on-year in 2024. Suwannee Jatsadasak, Assistant Governor of the BoT's Supervision Group, attributed the overall loan contraction to heightened caution among banks in approving new loans, stemming from increased credit risks and ongoing debt reduction efforts by borrowers.

Despite the reduction in loan portfolios, the banking sector's non-performing loan (NPL) ratio improved, decreasing to 2.78% in 2024 from 2.97% in 2023. This improvement is partly due to debt restructuring initiatives under the BoT's responsible lending framework.

One such initiative, the 'You Fight, We Help' program, aims to support vulnerable borrowers.

As of January 30, approximately 630,000 borrowers had registered for the program, with about 240,000 deemed eligible.

The registration deadline has been extended to April 30 to accommodate more participants.

The BoT continues to monitor loan expansion within the banking industry and, while not anticipating significant growth in the near term, remains focused on maintaining financial stability and supporting debtors through targeted relief measures.