Thai Banking Sector Braced for Economic Turbulence as Growth Forecasts Slump

 

 

Thai bank chiefs prepare for sub-2% GDP growth in 2026, pivoting to AI-driven efficiency and rigorous risk controls amid global trade tensions.

 

 

The heads of Thailand’s leading financial institutions have signalled a strategic shift towards defensive positioning, warning that 2026 will be defined by sluggish growth and acute market volatility.

 

Driven by a cocktail of external trade shocks and domestic structural bottlenecks, the kingdom’s banking elite are prioritising risk management and asset quality over aggressive expansion.

 

 

 

A Perfect Storm of Global and Local Pressures

Industry leaders are unified in their assessment: the Thai economy is entering a period of significant cooling.

 

Kattiya Indaravijaya, CEO of Kasikornbank (KBank), warned that the "external shocks" are intensifying.

 

She highlighted the looming threat of US import tariffs, escalating trade wars, and a broader global downturn as primary catalysts that will "inevitably" stifle Thai exports.

 

Domestically, the outlook is equally sombre. Private consumption and investment remain dampened by political uncertainty.

 

While state spending remains a vital pillar, Indaravijaya noted that budgetary constraints limit the government's ability to act as a primary engine for growth.

 

In response, KBank is doubling down on its "3+1 Strategy," maintaining a cautious 3.20% NPL ratio to protect its balance sheet.
 

 

 

 

The "Sub-2%" Warning

In a stark assessment, Payong Srivanich, president of Krungthai Bank (KTB), predicted that GDP growth could dip below 2% in 2026.

 

This would mark the first time in three decades—barring major global crises—that the Thai economy has performed at such a low level, trailing behind regional peers.

 

"We are facing a transition," Payong noted, pointing to the shifting political landscape following the recent elections.

 

Under the mantra "Stepping Stones to the Future," KTB is pivoting towards "Beyond Banking" models and the development of a Virtual Bank to capture the underbanked market while deploying AI to slash operational overheads.

 

Strategic Pivots: AI, Virtual Banking, and Debt Recovery
The sentiment was echoed across the "Big Four" and beyond:

 

SCBX: CEO Arthid Nanthawithaya confirmed that the group is aggressively preparing its infrastructure for a branchless "Virtual Bank" model. By leveraging data analytics and innovation, SCBX aims to drive financial inclusion while maintaining a disciplined approach to risk.

 

Krungsri (BAY): President Kenichi Yamato issued a conservative forecast of 1.8% growth, citing a strengthening Thai Baht and weak household income as significant headwinds. The bank's focus has shifted to rigorous cost control and asset management.

 

 

 

 

ttb: CEO Piti Tantakasem emphasised a "humanised digital banking" approach. Having met 2025 targets, ttb is now focusing on high provision levels to buffer against 2026’s uncertainty, with a specific focus on tackling the nation’s persistent household debt.

 

TISCO: Looking further ahead, CEO Sakchai Peechapat unveiled a three-year strategic roadmap (2026–2028). The group plans to utilise AI-driven automation to eliminate redundancies and enhance agility, aiming to find niche growth opportunities within their specialised sectors.

 

As Thailand prepares for a challenging fiscal year, the message from the C-suite is clear: the era of easy growth has passed.

 

For 2026, the industry’s survival and success will depend on how effectively these institutions can balance the cutting-edge promise of AI with the old-fashioned necessity of a guarded balance sheet.