Thailand's Bank Chiefs Brace for Prolonged Economic Slowdown
Eight CEOs warn high household debt and fragile domestic consumption will prolong growth slump; banks shift from expansion to asset protection
- The heads of Thailand's largest banks predict the national economy will face a slowdown for at least two to three more quarters, causing them to shift from expansion to "survival mode."
- The slowdown is attributed to both external pressures, like fading global demand and US trade policies, and internal weaknesses, including high household debt and fragile consumer spending.
- In response, banks are adopting a cautious strategy centered on risk management, preserving asset quality, controlling costs, and being prudent with new lending.
- A key part of their preparation is building financial buffers, with several institutions setting aside additional special reserves and provisions to protect against future economic uncertainty.
Eight CEOs warn high household debt and fragile domestic consumption will prolong growth slump; banks shift from expansion to asset protection
The heads of Thailand's eight largest commercial banks have collectively issued a stark warning, projecting that the Thai economy will endure a slowdown for at least two to three more quarters as they shift from expansion to survival mode.
The chorus of concern from the chief executives highlights an outlook burdened by both external volatility and deep-seated domestic issues.
Fading global demand is hitting exports, while a crushing burden of high household debt and fragile purchasing power continues to drag on local consumption.
In response, "caution" is now the central pillar of strategy across the financial sector.
Thai commercial banks are playing a prudent game, focusing intensely on risk management, preserving asset quality, controlling operational costs, and continuing to enforce a cautious approach to loan portfolio expansion.
Crucially, several institutions are setting aside additional special reserves to insulate against future uncertainty, signalling a period of "sustaining and adapting" rather than aggressive growth.
The Two-Front Challenge
Payong Srivanich, president of Krungthai Bank (KTB), warned that the economy's slowdown is imminent now that the recent export surge has peaked.
He pointed to deep structural weaknesses: ‘The country faces structural challenges, including existing vulnerabilities, especially high household debt and a large informal economy, [as well as] a lack of competitiveness in the new global context.’
KTB's strategy involves managing asset quality and supporting customers, particularly vulnerable groups with high debt, through sustainable debt resolution programmes such as the "You Fight, We Help" initiative.
Echoing this, Chartsiri Sophonpanich, president of Bangkok Bank (BBL), noted that external factors—including global economic uncertainty and US tax measures—combined with internal structural limits are eroding consumer confidence and private investment, making the future economic trend vulnerable.
BBL remains committed to a prudent operating approach and Responsible Lending.
Lending Slows as Uncertainty Persists
The pervasive mood of caution is reflected in the lending environment.
Kenichi Yamato, president and CEO of Bank of Ayudhya (BAY), noted the economy in the second half of 2025 faces growing pressure from the direct and indirect fallout of US trade policies, a fragile tourism recovery, and weakening domestic demand, which has led to lower loan demand.
Krungsri is focusing on rigorous funding cost management and cautious risk oversight.
Kattiya Indaravijaya, Chief Executive Officer of Kasikornbank (KBANK), said growth for the remainder of 2025 is trending lower, severely impacted by the US tariff adjustments.
She highlighted that government stimulus funds are limited and their effect may be partial, anticipating ongoing challenges into 2026.
KBANK will proceed with caution, optimising operations and fully supporting government customer aid efforts.
Banks Build Financial Buffers
Several institutions revealed they are building up protective financial walls against the expected downturn:
Arthit Nanthawithaya, CEO of SCB X (SCB), stated the company is pushing a strategic cost management through profound transformation using AI and innovation. Critically, SCB X has set aside an additional 1.4 billion baht in special reserves to mitigate future economic uncertainties.
Piti Tantakasem, CEO of TMBThanachart Bank (TTB), confirmed that despite being on track, the bank is under income pressure due to the economic slowdown and policy interest rate cuts. TTB continues to allocate special provisions (Management Overlay), meaning overall provisioning expenses are high compared to pre-pandemic levels.
Somsak Pejthaveeporadej, CEO of TISCO Financial Group, affirmed the group is maintaining a high level of credit loss reserves as planned, preparing for significant risks stemming from the US tariffs and ongoing issues with high household debt.
Despite the collective warnings, there remains an appetite for quality growth. Roy Augustinus Gunara, CEO of Thai Credit Bank (CREDIT), said the bank will cautiously expand its loan portfolio within a strong risk framework, aiming to maintain a double-digit loan growth rate and keep the non-performing loan (NPL) ratio below 4.5%.
