BOT warns NPLs may persist in 2026; major banks move to protect loan quality
Falling interest rates may offer some relief, but bankers and analysts say fragile incomes and weak demand will keep credit risks elevated, especially for SMEs and retail borrowers.
- The Bank of Thailand (BOT) warns that non-performing loans (NPLs) will remain a significant economic challenge in 2026 due to fragile economic conditions and weak debt-servicing capacity.
- In response, major banks like Siam Commercial Bank and Bangkok Bank are prioritizing the protection of loan quality over aggressive growth, describing the debt situation as a "crisis."
- Banks are implementing strategies such as tightening internal risk management, enhancing customer screening, and using early intervention to prevent NPLs from rising.
- Despite potential relief from lower interest rates, analysts forecast the NPL ratio will remain high in 2026, at approximately 2.80–2.97%, with SMEs and retail borrowers facing the greatest risk.
Thailand’s non-performing loan (NPL) problem is set to remain a major concern in 2026, even as falling interest rates provide some relief for borrowers, according to the Bank of Thailand (BOT), top bank executives and research analysts.
They say fragile economic conditions, uneven income recovery and weak debt-servicing capacity among both businesses and households continue to weigh on loan quality, keeping credit risks elevated into next year.
NPLs are still a major challenge for the economy
Vitai Ratanakorn, Governor of the Bank of Thailand, said NPLs remain a “big test” for the banking system and the broader Thai economy in 2026, with the situation still “worrying”.
He expressed hope that an easing interest-rate cycle, driven by the Monetary Policy Committee (MPC), would help reduce borrowers’ debt burden, improving repayment capacity over time.
Household debt is “already a crisis”
Kris Chanotoke, Chief Executive Officer of Siam Commercial Bank (SCB), said Thailand’s debt situation remains deeply concerning and described it as “already a crisis.
He cited SCB’s assessment of borrowers since 2019, saying only about 23% entered debt restructuring, around 23 out of every 100 people.
Within that group, fewer than 3% continued making payments consistently, and fewer than 1% managed to fully close out their debt.
For SCB, he said the key challenge in 2026 is not choosing between growth and risk control, but doing both at the same time: expanding lending to support the economy while preventing deterioration in existing loan quality that could push NPLs higher and threaten stability.
He added that the bank is tightening internal processes, especially in asset and debt management coordination, to strengthen its ability to manage risk, to keep NPLs from rising above current levels.
Focus on screening and early intervention
Chartsiri Sophonpanich, President of Bangkok Bank, said that in a low-growth environment, banks have little choice but to prioritise credit quality and loan risk more than before, particularly in 2026.
He said aggressive expansion could backfire, so banks need a cautious growth approach alongside close management of asset quality.
Chartsiri added that Bangkok Bank views the situation as manageable and said it is not facing uncontrollable NPL levels.
He highlighted careful customer screening from the start, close monitoring and early-stage problem-solving, alongside continued support for customers to stabilise finances, maintain liquidity and keep businesses operating.
NPL ratio likely to stay high in 2026
Kanchana Chokpaisalsilp, a research executive at Kasikorn Research Centre, said NPLs in Thailand’s banking system remain high amid a fragile economy.
Kasikorn Research expects lower bank lending rates to ease financing costs for both businesses and households, but forecasts NPLs in 2026 will likely remain broadly steady at a high level, reflecting weak borrower balance sheets under a limited economic recovery.
It projects the 2026 NPL ratio at around 2.80–2.97% of total loans, warning that risks remain particularly acute among SMEs and retail borrowers, who continue to face pressure from unstable incomes and weak purchasing power.
