Thai Loan Growth Declines 0.4%, Hits 15-Year Low

The Bank of Thailand (BOT) reported a 0.4% contraction in commercial bank loans for Q4 2024, the sharpest decline since 2009, reflecting reduced demand from retail and small and medium-sized enterprises (SMEs) as banks tighten lending criteria. Despite a reduction in non-performing loans (NPLs) to 2.78%, the BOT emphasized the need to monitor SMEs and households struggling with high debt burdens and slow income recovery. While corporate lending saw some growth, consumer loans, particularly auto loans, continued to decline due to structural issues affecting vulnerable segments. The Thai economy's sluggish growth, reported at 2.5% in the previous year, is prompting calls for increased credit access to support smaller businesses. The government is pushing for a 3.5% growth target this year, highlighting the importance of collaboration between banks and government agencies to bolster the economy. Overall, the banking sector remains resilient, although risk aversion persists among lenders.