Thai Banks Post 101bn Baht H1 Profit, But Headwinds Loom

 

 

Six of Thailand's largest banks posted a combined 101.4 billion baht net profit in the first half of 2026, even as Fitch warns of a "deteriorating" sector outlook for the rest of the year.

 

Six of Thailand's largest listed banks reported a combined net profit of approximately 101.4 billion baht for the first half of 2026, as wealth management and fee income cushioned the impact of falling interest margins, though ratings agency Fitch has warned that earnings and asset quality across the sector face further pressure in the second half of the year.

 

The six lenders — SCB X Public Company Limited (SCBX), Kasikornbank (KBANK), Bangkok Bank (BBL), Bank of Ayudhya (Krungsri/BAY), TMBThanachart Bank (TTB) and Kiatnakin Phatra Bank (KKP) — posted a mixed set of results, with some seeing profits decline on shrinking net interest income while others benefited from strong non-interest revenue, disciplined cost control and lower provisioning.

 

Combined, KBANK led with 27.9 billion baht in net profit, followed by SCBX at 21.3 billion baht, Bangkok Bank at 20.5 billion baht, Krungsri at 16.9 billion baht, TTB at 10.7 billion baht and KKP at 4.1 billion baht.

 

 

Interest margins under pressure across the board

A common theme across nearly all lenders was a decline in net interest income, driven by successive Bank of Thailand policy rate cuts through 2025 and into 2026, which compressed net interest margins (NIMs) even as banks sought to ease borrowing costs for customers.
 

Bangkok Bank's net interest income fell 12.4% year-on-year, pushing its NIM down to 2.46%, while KBANK's net interest income dropped 9.55% to 63.4 billion baht, with its yield on earning assets falling to 2.91% from 3.36%. SCBX's net interest income slipped 10.2% year-on-year to 27.3 billion baht.
 

 

 

Krungsri was a notable exception, with its NIM improving to 4.60% from 4.14% a year earlier, which it attributed to the consolidation of higher-yielding loans from its Ngern Tid Lor (TIDLOR) subsidiary and growing contributions from its ASEAN businesses, alongside disciplined funding cost management.

 

 

Fee and wealth income offset the squeeze

Banks leaned heavily on non-interest income to offset the margin pressure. KBANK's non-interest income jumped 29.81% to 35.9 billion baht, driven by wealth management, bancassurance and investment gains.

 

SCBX's fee and other income rose 14.8%, supported by its "Group Wealth Synergy" strategy spanning SCB WEALTH by CardX and global investment platform InnovestX.

 

KKP delivered the sharpest improvement, with second-quarter net profit up 50.6% year-on-year to 2.1 billion baht, and first-half profit surging 65.0% to 4.1 billion baht, driven by a 49.0% rise in non-interest income from wealth management, its digital investment platform Dime!, fund management fees and insurance brokerage commissions. Its brokerage arm, KKP Securities, retained its position as Thailand's top equity broker by market share.
 

Krungsri's non-interest income rose 15.4%, aided by fair-value gains on financial instruments and improved bad-debt recoveries under its "Clear Debt, Move Forward" programme, while TTB's fee income from mutual funds, bancassurance and credit cards also lifted quarterly revenue by 3.7% quarter-on-quarter.

 

 

 

Cost discipline and asset quality

Every bank pointed to cost control as a stabilising factor. SCBX's operating expenses fell 2.2% year-on-year, bringing its cost-to-income ratio to 41.3%, while KBANK's operating costs declined 2.02%, with a cost-to-income ratio of 40.33%. Krungsri reported a cost-to-income ratio of 45.5%, while Bangkok Bank's expenses fell 6.5%, taking its ratio to 47.1%.

 

Asset quality was broadly steady but far from strong.

 

SCBX's non-performing loan (NPL) ratio improved slightly to 3.17% from 3.23%, with coverage at 158.6%. KBANK's NPL ratio stood at 3.18%, with coverage strengthened to 173.90% as it booked 19.8 billion baht in provisions over the half-year "to accommodate uncertainty in the Thai economy that continues to face challenges from abroad", the bank said.

 

Bangkok Bank's NPL ratio was 3.3%, with coverage at a strong 306.3%. Krungsri's NPL ratio improved to 3.08% from 3.26% at end-2025, with a credit cost of 236 basis points and coverage of 137.9%.

 

TTB kept its NPL ratio broadly flat at 2.93%, with coverage rising to 157% from 152%, while continuing to book "management overlay" provisions given lingering economic uncertainty.

 

 

Executives strike a cautious tone

Bank executives were candid about the tougher operating backdrop. SCBX chief executive Arthid Nanthawitthaya said the Thai economy "continued to face pressure from an uncertain macro environment" in the second quarter, with the recovery "still concentrated" and household debt "remaining elevated".

 

He said the group's diversified business model, particularly its wealth arm, reflected client confidence and would support customers "through this challenging period" as part of sustaining the wider economic recovery.

 

Krungsri chief executive Kenichi Yamato said the bank had delivered a "resilient performance" in the first half "amid a moderating economic backdrop", but flagged several downside risks for the rest of the year, including energy price volatility linked to Middle East tensions, uncertainty over US trade policy, a possible slowdown in consumption once the government's "Thai Chuay Thai Plus" stimulus scheme expires, El Niño-related risks, and structural constraints on growth.

 

Krungsri forecasts Thailand's GDP growth will slow to 1.9% in 2026 from 2.4% in 2025.

 

TTB chief executive Piti Tantakasem said the bank's first-half performance was "in line with its plan", citing capital management progress including an accelerated share buyback programme — now 21 billion baht of a 35-billion-baht authorised total completed roughly a year ahead of schedule — alongside continued debt-relief support for customers under schemes such as "Rub Nee" and "Khun Su Rao Chuay".

 

Bangkok Bank said Thailand's economy in the second quarter was "broadly unchanged" from the previous quarter, supported by strong technology-related exports linked to the global AI investment cycle, but cautioned that constrained fiscal space, elevated public debt and below-expectation tourism activity continued to weigh on the outlook.

 

 

Fitch: sector outlook deteriorating

The results come alongside a Peer Credit Analysis published by Fitch Ratings on 20 July, which assigned a "deteriorating" outlook to the Thai banking sector for 2026.

 

Fitch said Thailand's GDP growth is expected to remain low relative to regional peers, at 1.8% in 2026, and that the lagged effect of Bank of Thailand rate cuts made through to the first quarter of 2026 would exert greater pressure on margins this year.

 

The agency said impaired-loan ratios were likely to rise further, particularly among SME borrowers — where non-performing loan ratios already average above 9% — and in unsecured retail lending to lower-income groups.

 

It noted, however, that high loan-loss coverage and common equity Tier 1 (CET1) ratios of between 16.4% and 18.7% across the major banks provide a solid buffer against downside risks, and it does not expect a large rise in credit costs this year.

 

Fitch rates Bangkok Bank, KBank, SCB and SCBX at 'BBB'/Stable, Krung Thai Bank and Bank of Ayudhya at 'BBB+' (Negative and Stable outlooks respectively), and TMBThanachart at 'BBB'/Negative.

 

It said ratings for Krung Thai Bank and ttb, which rely on government support ratings, would be sensitive to any downgrade of Thailand's sovereign rating of 'BBB+'/Negative, whereas Bangkok Bank, KBank and SCB's ratings are driven by standalone viability and would not necessarily move with the sovereign.

 

Taken together, the first-half results suggest Thailand's major banks have so far absorbed the impact of a soft economy and falling rates through fee income growth and cost discipline, but both bank executives and Fitch agree that margin pressure, elevated household and SME debt, and external risks — from Middle East-linked energy volatility to US trade policy — are likely to test that resilience further in the second half of 2026.