Fitch Ratings expects the downtrend in Thai banks’ earnings to persist into 2026, as profitability comes under pressure.
Net interest margins are set to narrow with falling interest rates. The Bank of Thailand has reduced its benchmark rate to 1.5% as of November 2025, down from 2.5% in October 2024, and Fitch anticipates two additional cuts over the coming year.
Although loan demand may recover slightly from current low levels, overall growth is still projected to remain modest.
Bank of Thailand data shows total lending shrinking 1% year-on-year in Q3 2025, with continued declines in consumer and SME lending.
Business credit provides some optimism, with survey results from senior loan officers pointing to expected growth in Q4 2025. Auto financing is also likely to support consumer lending.
Looking forward, banks are expected to focus on strengthening asset quality and maintaining cleaner loan books. UOB Kay Hian analyst Thanawat Thangchadakorn noted that several banks are increasing special provisions to prepare for future risks.
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