Thai banks saw a combined net profit increase of 5% year-on-year (YoY) and 12% quarter-on-quarter (QoQ) for the first quarter of 2025, according to UOB Kay Hian (UOBKH).
Despite the positive profit growth, banks are prioritizing asset quality over loan expansion. This strategy reflects concerns about the potential impact of U.S. tariffs and the deteriorating economic outlook, according to UOBKH analyst Thanawat Thangchadakorn.
“We observed loan contractions in several banks in Q1 2025, with institutions focusing on maintaining strong asset quality rather than increasing loan volumes,” Thangchadakorn said.
UOBKH forecasts a 1% year-on-year loan contraction for Thailand’s banking sector in 2025.
Net interest income (NII) fell by 6% YoY and 4% QoQ due to lower lending yields. In contrast, non-interest income (Non-II) grew by 18% YoY and 14% QoQ, supported by more favorable conditions in capital markets.
Looking ahead, UOBKH expects banks to report lower net interest margins (NIMs) in 2025 than originally targeted. This is attributed to the expected policy rate cut to 1.50% by the end of the year.
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