Bank loans are expected to increase marginally by 0.6% to 14.8 trillion baht this year, bouncing back from a contraction last year, driven by large businesses while small and medium-sized enterprises (SMEs) and retail borrowers remain in the red, says Kasikorn Research Center (K-Research).
Kanjana Chockpisansin, the think tank's head of research, banking and finance, said bank loans are likely to rebound in the second half of this year amid a downward interest rate trend, with loans to large businesses a major driver.
K-Research anticipates bank loans edging up by 0.6% to 14.8 trillion baht this year, with large corporate loans rising 3%.
Loans to SMEs and retail borrowers should each contract by 1%, respectively, noted the research house.
Business loans, including those extended to companies of all sizes, are projected to drop 1.5% this year. In 2024, bank loans decreased 0.4%, the first annual decline since 2010.
"Bank loans have slightly recovered, mainly those extended to large companies, while credit extended to SMEs remains slow," she told the Bangkok Post.
The ratio of household debt to GDP is 89% and should take some time to ease to a sustainable level of 80%, said Ms Kanjana.
The non-performing loan (NPL) ratio could increase slightly this year amid ongoing economic challenges, she said.
The think tank predicts NPLs of total outstanding loans to be in a range of 2.65-2.85% this year, compared with 2.7% by the end of 2024.
Meanwhile, the Bank of Thailand's easing of loan-to-value (LTV) rules to prop up the property sector should help increase mortgages, noted K-Research.
The think tank originally targeted mortgage growth of 0.5% this year. With the LTV relaxation, property loans are on course to rise by 0.6-0.7% in 2025, said Ms Kanjana.
The recent bank loan interest rate cuts, following the central bank's policy rate reduction in February, are expected to benefit 56% of business and retail loans, mostly new loans.
K-Research believes the central bank still has room for another rate cut in the second half of 2025, she said.
According to Krungsri Securities (KSS), commercial bank loans contracted 0.2% month-on-month in February due to declining government loans, while business loans increased. SME and retail loans remained stable.
"Banks continue to exercise caution in lending due to the uncertain economic recovery," said Chayaporn Tocharoen, bank analyst at KSS.
Compared with the end of 2024, banking sector loans have declined 0.8% year-to-date, with the strongest performers Bangkok Bank with a 1.1% uptick, followed by Siam Commercial Bank (0.7%) and Tisco Bank (0.2%).
Banks reporting loan contraction were Kiatnakin Phatra Bank (-0.9% year to date), TMBThanachart Bank (-1.7%), Krungthai Bank (-2.1%) and Kasikornbank (-2.4%).
Commercial banks reported a 0.1% month-on-month increase in deposits in February.
Compared with the end of last year, banking sector deposits rose 0.1% year-to-date. The loan-to-deposit ratio for February was 85.8%, decreasing from 86.1% a month earlier.
