Somchai Lertlapwasin, Assistant Governor of the Financial Institution Supervision Group, and Suchot Piamchon, Senior Director of the Financial Institution Model Audit and Risk Analysis Department at the Bank of Thailand (BoT), revealed the overall picture of commercial banks in Q4 2025 and the year 2025. The commercial banking system remains stable and resilient, with a capital adequacy ratio at 20.9%, reserves at 183.3%, and liquidity at 215.1%, all well above the required standards.
Total loans in the commercial banking system (including affiliated groups) in Q4 2025 contracted by 1.1% compared to the same period last year, similar to the previous quarter. This marks six consecutive quarters of contraction, particularly in SME loans, which have declined for 14 straight quarters, and consumer loans, which continue to shrink due to persistently high credit risk. Large business loans contracted slightly, partly reflecting reduced loan demand amid economic conditions. Future loan demand will depend on both the Thai and global economies; addressing long-term structural issues to enhance competitiveness and attract investment could boost credit demand.
Regarding credit quality, non-performing loans (NPL) in Q4 2025 decreased to 536 billion baht due to debt repayments and credit quality management. Consequently, the NPL ratio to total loans declined to 2.84%. Stage 2 loans also fell to 7.07%, mainly due to debt repayments under restructured terms. Moreover, commercial banks continue to provide ongoing assistance to borrowers.
For 2025 performance, operating profit before provisions decreased by 4.5% to 505 billion baht, while net profit dropped 3.6% to 272 billion baht compared to the previous year. The primary cause was lower net interest income, reflecting interest rate reductions granted to borrowers in line with policy rate cuts and relief measures under the "You Fight, We Help" program. Additionally, the contraction in loans due to weaker loan demand contributed to the decline.
Credit risk remains elevated amid a slowing economy, requiring close monitoring of tight financial conditions and repayment capacity of SME and household borrowers during a period of subpar and uneven economic growth. Structural challenges are also causing income growth to slow. Targeted financial measures have helped ease debt burdens for vulnerable businesses and households. The household debt-to-GDP ratio in Q3 2025 remained stable from the previous quarter but is expected to decline in Q4. Household loans continue to contract at a similar pace.
Regarding the Loan-to-Value (LTV) measure extended for one year and set to expire in June, Somchai stated that if necessary to support the real estate sector's recovery, the measure may be further extended. Preparations will be made to present the data to the committee for consideration.
Suchot commented on the real estate sector, noting that loans for high-priced homes continue to grow due to strong purchasing power in that segment. The housing price index remains stable with some potential improvement, especially in the second-hand home market, which is growing as buyers prefer affordable, well-located used homes for renovation.
. . . (no translation as this is an incomplete phrase) State Policy Additional