Thai bank profit seen falling 10% in Q3 whilst credit costs ease

Banks are likely to remain cautious in lending and focus on corporate loans.

Thai banks’ aggregate net profit and pre-provision operating profit is expected to be lower by 10% year-on-year (YoY) each in Q3 2026, according to estimates by UOB Kay Hian (UOBKH).

The banking sector’s loan portfolio will be flat compared to Q2, and inch up 3% YoY.

“Overall, we expect banks to remain cautious in lending and focus on corporate loans,” said Thanawat Thangchadakorn, analyst at UOBKH, in a sector report published on 22 September.

Credit costs are projected to drop in Q3, as many Thai banks have already set special provisions in Q1 to cushion against the impact of the Middle East tensions, Thangchadakorn said.

“Meanwhile, banks have also stated that the impact from the Middle East conflict was less than expected. Therefore, we expect to see a reduction in credit costs in 2H26 and are optimistic about the credit cost outlook and asset quality for the sector,” Thangchadakorn said.

Thangchadakorn expects the nonperforming loan (NPL) ratio stabilising at 3.1% in Q3.

In an earlier report, UOBKH declared Q2 a flat quarter for Thai banks, with incomes remaining similar to Q1 levels.

Some banks have guided for an improvement in NIM going forward, and that NIM is likely to have bottomed in Q2.