Non-Performing Loans on the Rise in Thailand's Economy
Economic strain heightens KBank's concern over increasing non-performing loans; emphasizes the importance of strategic business adjustments.
The commercial banking sector in Thailand is grappling with a surge in non-performing loans (NPLs), as reported in the first quarter of 2025. The NPL ratio has climbed from 2.78% to 2.9%, with significant increases stemming from Small and Medium Enterprises (SME) loans across various sectors. The Bank of Thailand (BOT) has indicated that NPLs are also creeping up within the high-income group.
This alarming trend aligns with the turmoil in Thailand's economy, which has been hit hard by the intensifying trade war with the U.S. and pre-existing structural weaknesses in Thai businesses, strain from the COVID-19 pandemic notwithstanding. These issues have amplified the difficulties faced by debtors, leading to a rise in defaults and delinquent payments across the board.
This predicament is reflected in the mounting NPLs in the Thai banking sector, as observed throughout 2025. Notable cases of companies grappling with financial difficulties include:
- RS Group (RS) - Failed to meet interest payments and loan obligations to financial institutions.
- Italian-Thai Development (ITD) - Accumulating losses, high debt, liquidity issues, and pending long-term debt repayments.
- Jasmine Technology Solutions (JTS) - Inadequate funds to redeem bonds.
- CH. TAVEE (CHO) - Delinquent on bond payments and interest.
- Clover Power (CV) - Unable to meet multiple bond interest payments.
- JKN Global Group (JKN) - Defaulted on loans from financial institutions and bonds, prompting the company to file for business rehabilitation.
KBank Hoping to Lift the Burden on Debtors
Amid the economic slowdown, business leaders at KASIKORNBANK (KBank), like President Pipit Aneaknithi, have expressed concern about the mounting difficulties businesses are facing. Pipit noted that the situation is intensifying, as demonstrated by an increase in problematic cases among loan portfolios, with delays and defaults becoming more frequent.
In response, KBank is making strides to support its customers by offering debt restructuring options, extending repayment terms, and working closely with businesses to assess their cash flows, with the aim of resolving issues and assisting clients in adjusting their structures.
However, prudence is necessary, as lending policies have had to tighten in light of the economic upheaval. Despite the tightened policies, KBank has not adjusted its financial goals, with non-performing loans (NPLs) projected to remain below 3.25%. The bank will closely monitor developments in the trade war and the results of US-Thailand negotiations for further guidance on revising its goals later in the year.
Sustainable Loans: A Climate-Conscious Path Forward
KBank has identified sustainable loans as a key component of its strategy for the future. The bank has pledged to increase its focus on sustainable loans and is determined to raise its sustainable loan target above 200 billion baht this year. The bank made this announcement at its recent large-scale forum, "EARTH JUMP 2525: Transition thru Turbulence," which focused on transitioning business practices to adapt to climate change and other economic challenges.
By 2030, KBank aims to achieve Net Zero in its operations and align its loan portfolio with the country's sustainability goals, with a plan to provide 1-2 trillion baht in loans and investments for the green transition. KBank has already issued 150 billion baht in green loans, and the bank is prepared to increase this total if demand for sustainable loans continues to grow.
In the face of multiple crises, Kattiya Indaravijaya, CEO of KBank, emphasized the need to move forward, adapt, and innovate quickly. By focusing on health checks, commitments to sustainability, and solving problems, KBank hopes to help businesses in the transition to a more sustainable, climate-conscious future.
Thailand at a Pivotal Moment
According to Pipit, Thailand is currently at a crucial crossroads, facing external pressures from the trade war, new alliances, and climate change. If Thailand can effectively adapt in this new economic landscape, it stands the chance of emerging as a leader in the Green Transition, particularly through investments in Green Tech, Green Finance, and Green Governance. Failure to adapt, on the other hand, could lead to Thailand being left behind or losing its position in the evolving global economy.
To facilitate this transition, KBank is investing in key industries for the coming transition, including energy, coal, oil and gas, cement, aluminum, and automotive sectors, with the goal of completing the puzzle by aligning lending strategies with the potential of each sector's customers.
In conclusion, the rise in non-performing loans in Thailand signals an urgent need for the economy to flex and take on new challenges in the global economy. With sustainable loans and the Green Transition front and center, KBank is positioning itself as a major player in Thailand's shift towards a more environmentally-friendly, sustainable future.
- The surge in non-performing loans in Thailand's economy has led to increased concern among business leaders, with KASIKORNBANK (KBank) offering debt restructuring options and extended repayment terms to support its customers.
- Amid this economic slowdown, KBank has identified sustainable loans as a key strategy for the future, aiming to raise its sustainable loan target above 200 billion baht this year and aligning its loan portfolio with the country's sustainability goals.
- Kattiya Indaravijaya, CEO of KBank, emphasizes that Thailand is currently at a crucial crossroads, facing external pressures from the trade war, new alliances, and climate change. KBank is investing in key industries for the coming transition, including green tech, green finance, and green governance, to facilitate Thailand's shift towards a more environmentally-friendly, sustainable future.
- The situation in Thailand's economy, with its struggling businesses and rising non-performing loans, highlights the need for political, economic, and environmental changes. Effective adaptation to these challenges could allow Thailand to emerge as a leader in the Green Transition, while failure to adapt could result in loss of position in the evolving global economy.
