Business loans will likely pick up this quarter from the prior three months, both from large corporations and small businesses, while the Bank of Thailand’s regulations to support the government’s debt relief programme provide financial institutions options in managing non-performing loans (NPLs), say analysts.
Large corporate loan demand will increase quarter-on-quarter in the final three months of 2025 for the purposes of investment, while small and medium-sized enterprises (SMEs) will likely require more loans for working capital, said Weerapat Wonk-urai, an analyst at CGS International Securities (Thailand).
In addition, consumer loan demand is expected to rise for auto loans thanks to year-end promotions from car manufacturers and the International Motor Expo in December.
Demand for housing loans and credit card loans will likely remain unchanged from three months prior, he said, citing findings from the central bank’s Senior Loan Officer Survey.
“Although we believe sector loan growth will accelerate in the fourth quarter from the prior three months, we maintain sector aggregate loan growth estimates at -3.3%, 1.1% and 2% for 2025, 2026 and 2027, respectively,” noted Mr Weerapat, adding aggregate loan growth was -3% in the first nine months of this year from year-end 2024.
The survey revealed financial institutions are likely to tighten further credit standards for SME loans this quarter, although interest rates have fallen since the last three months of 2024.
“In our view, lenders are cautious about SME borrowers as many are vulnerable amid slow economic growth. However, banks believe the asset quality of large corporate borrowers will improve quarter-on-quarter thanks to their declining funding cost,” he said.
The Finance Ministry and central bank’s project to tackle household debt “will help offload NPLs from banks’ balance sheets and provide troubled debtors the chance to clear their missed payment record in the credit bureau system,” said Mr Weerapat.
Chayaporn Tocharoen, an analyst with Krungsri Securities, said the economy remains highly uncertain going forward due to domestic and international factors, which may affect the recovery of business and household income, particularly vulnerable groups. This outlook may continue to impact credit quality, prompting financial institutions to come up with more flexible mechanisms to accommodate non-performing assets that may gradually increase, she said.
The central bank is likely to allow commercial banks, specialised financial institutions and non-banks to jointly invest with asset management companies or legal entities engaged in asset management on a temporary basis, which should increase efficiency in debt collection and provide financial institutions with additional options for managing NPLs, noted the brokerage.