11 Thai banks report profit dip, with rising bad debt concerns and uncertain Q3 ahead

Thailand’s commercial banks have announced their Q2 2025 results, with a combined profit of 66.2 billion baht, reflecting a 2.97% decline compared to the previous quarter's profit of 68.3 billion baht. However, for the first half of the year, the total profit of 134.5 billion baht saw a 3.97% increase year-on-year.

The increase in provisions for bad debts reached 57.6 billion baht in Q2, a 5.32% rise compared to the previous quarter, and an 8.73% drop compared to the same period last year. The total provisions for the first half of 2025 amounted to 112.3 billion baht, a decrease of 8.97% year-on-year.

Among the 11 banks reporting are Bangkok Bank (BBL), Kasikornbank (KBANK), SCB X Group (SCB), Bank of Ayudhya (BAY), TMBThanachart Bank (TTB), TISCO Financial Group (TISCO), Kiatnakin Phatra Bank (KKP), Land and Houses Bank (LHFG), CIMB Thai Bank (CIMBT), Krungthai Bank (KTB), and Thai Credit Retail Bank (CREDIT).

SCB X Group CEO Arthid Nanthawithaya highlighted that despite the uncertainty in the economy and the prolonged household debt crisis, SCB X Group has focused on assisting all debtor groups through the government’s "You Fight, We Help" programme, which will be expanded in Phase 2 to provide further opportunities for vulnerable debtors to recover.

In Q2 2025, SCB reported a net profit of 12.79 billion baht, marking a 27.7% increase compared to the same period last year. The bank’s net profit for the first half of 2025 reached 25.29 billion baht, a 18.7% increase from the previous year. The increase was attributed to higher investment income, lower provisions, and efficient cost management.

SCB also reduced operational expenses by 5.6%, amounting to 17.53 billion baht, through effective cost control, and its cost-to-income ratio decreased to 40.2%. The bank's non-performing loan (NPL) ratio in Q2 was 3.31%, down from 3.34% last year. Additionally, SCB has received approval to establish a branchless commercial bank, aiming to expand digital financial services and drive long-term growth.

Kattiya Indaravijaya, Chief Executive Officer of Kasikornbank, stated that amidst the challenges posed by high-risk economic factors both domestically and internationally, as well as concerns over the global economic slowdown, the bank continues to operate with caution. The focus remains on creating sustainable value for all stakeholders, including responsibilities towards depositors, investors, and both individual and business clients, providing appropriate support in various areas.

Furthermore, the bank is committed to delivering stable returns to shareholders by continuing to implement its "3+1 Strategy" and consistently improving operational efficiency (productivity) within the context of a highly uncertain economy.

For Q2 2025, the bank reported a net profit of 12.48 billion baht, a 9.45% decrease, primarily due to a reduction in net interest income following market conditions and interest rate cuts aimed at supporting borrowers.

Additionally, the bank set aside provisions for expected credit losses amounting to 10.05 billion baht, an increase of 232 million baht, or 2.36%. For the first half of the year, total provisions stood at 19.86 billion baht, in line with prudent practices, to maintain provisions at a suitable level to account for the ongoing uncertainty in the economy, as well as potential future impacts.

Non-performing loans (NPLs) remained at 3.18%, requiring continued careful monitoring of asset quality in light of the uncertain economic conditions. The coverage ratio, which reflects provisions for expected credit losses against NPLs, increased to 162.77%.

Piti Tantakasem, Chief Executive Officer of TMBThanachart Bank (TTB), revealed that the economic conditions in Q2 remained highly uncertain due to both internal and external factors. As a result, TTB has consistently emphasized cautious business operations. Among the bank's top priorities are customer care, increasing shareholder value, and managing asset quality amid rising risks.

Piriyaphon Kongwanich, Director of Fundamental Analysis at Bualuang Securities, stated that the overall profits of the banking sector for Q2 2025 were better than expected, averaging a 7% increase. For KBANK and TTB, results were in line with expectations, while SCB exceeded forecasts by 17%, KKP by 26%, BBL by 7%, and TISCO by 6%. The better-than-expected performance was mainly driven by investment income and reduced operating expenses, while NPL ratios remained stable or slightly increased.

“However, we maintain our previous forecast for a 7% year-on-year decline in bank sector profits for the entire year, with the market predicting a 2% drop from last year. This caution reflects the overall concerns for Q3 2025, where the market will begin to feel the impact of Trump's tax policy, and banks are likely to assess the possibility of 1-2 policy rate cuts in the second half of this year,” he said.

Phisut Ngamwijitwong, Senior Director Securities Analysis Department Kasikorn Securities, noted that the profits of banks in Q2 2025, as reported, were better than expected, mainly due to investment income. However, KKP is the only bank showing improvements in multiple areas.

For Q3 2025, the banking sector is expected to show a decline from Q2 2025 due to a continued reduction in NIM and a contraction in loan growth. All banks are likely to continue tightening credit issuance. Asset quality is expected to weaken further, and credit costs are likely to rise. However, profits achieved so far are expected to remain strong, with potential upward revisions for some banks with better-than-expected results.