Commercial bank loans in Q2/2026 grew 2%, driven by large corporate lending, while SME loans continued to contract for four consecutive years. NPLs remained stable. In terms of operating performance, the commercial banking system posted a net profit of 83 billion baht in Q2, up 6.8% year-on-year, driven primarily by gains from fair-value measurement of financial instruments and increased securities brokerage fees.
Suchotee Piamchon, Senior Director of the Model Examination and Financial Institution Risk Analysis Department at the Bank of Thailand (BOT), disclosed that loans within the commercial banking system (including affiliates) in the second quarter of 2026 expanded by 2.0% year-on-year, driven primarily by large corporate loans, which grew 6.6%, reflecting increased working capital demand resulting from higher energy costs and rising raw material prices.
Meanwhile, SME loans and consumer loans continued to contract. SME loans shrank by 4.6%, recording negative growth for 16 consecutive quarters, in line with persistently high credit risk.
The overall commercial banking system remains sound and stable, with capital funds, reserves, and liquidity all at high levels. Commercial bank loans in Q2 expanded by 2%, Suchotee noted.
On loan quality, Stage 3 NPLs as of Q2 2026 declined to 534.8 billion baht, mainly due to accelerated debt quality management efforts, resulting in the NPL-to-total-loans ratio remaining stable at 2.82%, close to the previous quarter — which coincided with the early period of the Middle East conflict situation.
Stage 2 loans declined to 6.78%, partly due to vulnerable borrowers migrating further into NPL status, while some borrowers who had previously been qualitatively classified improved their standing. Nevertheless, commercial banks continued to assist borrowers through proactive debt restructuring, which has helped slow the formation of new NPLs.
Regarding operating performance, the commercial banking system's net profit in Q2 stood at 83 billion baht, rising 6.8% year-on-year, driven primarily by gains from fair-value measurement of financial instruments and higher securities brokerage fees, together with lower provisioning expenses — after banks had set aside substantial provisions in prior periods — and improved operating cost management. These factors helped offset a decline in net interest income that resulted from interest rate reductions granted to borrowers, in line with the direction of the policy interest rate and ongoing borrower assistance efforts.
Suchotee said that going forward, continued uncertainty surrounding the Middle East conflict and an uneven recovery of the Thai economy remain factors weighing on debt repayment capacity, particularly among already-vulnerable SME borrowers and households facing income volatility and a higher cost of living. Credit quality trends in the commercial banking system should therefore continue to be closely monitored. Government debt-relief measures and continued liquidity support from financial institutions are expected to help sustain businesses and households in the period ahead.
Suchotee said the BOT has been closely monitoring debt quality, particularly the flow rate of loans from the normal category into non-performing status, which has shown a rising trend, especially among previously vulnerable borrowers who have been further impacted by higher raw material and energy costs. Sectors requiring special vigilance include construction, which is facing surging raw material costs; real estate, where purchasing power has not recovered sufficiently; and the hotel and trade sectors, which are facing intense competition.
Household debt edged slightly lower to 85.9% of GDP, partly reflecting a higher GDP base driven by price-level effects and a slowdown in retail lending in line with more cautious consumer spending behaviour. In managing NPLs, commercial banks have opted to write off and sell debt out of their portfolios in order to improve management flexibility.
Looking ahead, the BOT has prepared supplementary measures to assist borrowers, such as adjusting the criteria supporting debt restructuring to allow greater flexibility, enabling banks to reduce instalment payments for borrowers more effectively and adequately. These measures will be deployed immediately if there are signs that current assistance is insufficient to halt the flow of NPLs, or if economic conditions deteriorate beyond expectations.
It was confirmed that these are preparatory measures — for example, reducing monthly instalments from an original payment of 1,000 baht to approximately 800 baht, a reduction of 20%, in order to ease the burden on borrowers. The reduction process can take multiple forms, including interest rate reductions, principal payment deferrals, or loan term extensions, so that initial instalments are lower and increase later on a step-up basis. In cases where borrowers face severe difficulties such that a 20% instalment reduction is still insufficient, financial institutions may consider a haircut or debt reduction as appropriate through negotiation, Suchotee said.
In addition, the BOT is also operating the SME Portal project and exploring the use of alternative data to reduce barriers to credit access for SMEs, which will help reduce price distortions and make the allocation of resources within the economy more balanced. This is because in the past, problems often arose from information asymmetry, making commercial banks reluctant to extend loans as they were unable to adequately assess risk.
