BANGKOK, May 19 (Xinhua) -- Thailand's banking sector remained robust with high levels of capital, loan loss provisions, and liquidity in the opening quarter of 2026, though profitability dipped amid lower net interest income and geopolitical risks, the central bank said on Tuesday.
According to the Bank of Thailand, overall commercial bank loans expanded 0.2 percent year-on-year in the January-March period, driven by a rebound in large corporate borrowings, as businesses sought working capital to manage rising energy and raw material costs tied directly to the ongoing conflict in the Middle East.
However, lending to small- and medium-sized enterprises (SMEs) and consumer loans continued to contract due to persistently high credit risks, the central bank said in a statement.
Asset quality in the banking system remained largely unchanged compared to the previous three months, with non-performing loans (NPLs) held steady at 535.8 billion baht (about 16.4 billion U.S. dollars), said the central bank's assistant governor, Somchai Lertlarpwasin.
Somchai said the sector's gross NPL ratio was 2.85 percent at the end of the first quarter, with a slowdown in new NPL formation across all loan portfolios.
Net profit in the Southeast Asian country's banking sector dropped 7.6 percent from the same period last year, mainly attributed to a decline in net interest income, which fell in tandem with policy rate reductions and ongoing debt assistance measures for borrowers, Somchai told a news conference.
He added that some commercial banks increased their provisioning buffers to prepare for uncertainties stemming from the Middle East conflict.
Looking ahead, the central bank cautioned that the slowing Thai economy and external shocks from the regional conflict are making the corporate and household sectors increasingly fragile, given reduced incomes and higher living expenses.
It also emphasized the need to closely monitor tight financial conditions and the debt-servicing capabilities of vulnerable SMEs and households. ■
