Thai banks’ focus on asset quality and ‘clean’ loan books in 2026

The banks are expected to report a loan contraction in 2025 compared to last year.

Thai banks are likely to prioritize asset quality and clean loan portfolios in the near future, according to a report by UOB Kay Hian (UOBKH).

Many banks have reported a quarter-on-quarter decline in credit costs, which reflects UOBKH’s better asset quality outlook, said analyst Thanawat Thangchadakorn.

Thangchadakorn and UOBKH observed that some banks have continued to beef up special provisions to cushion against future uncertainties.

“We are more positive on banks’ asset quality condition as banks have highly prudent lending portfolios,” Thangchadakorn said.

As a result, Thai banks will likely report a loan contraction in 2025 compared to 2024, he added.

Expect to see capital management from banks, Thangchadakorn said. For example, TMBThanachart Bank (TTB) will roll out a new share buyback programme in early 2026. UOBKH and Thanchadakorn also expect Krungthai Bank (KTB) to initiate a share buyback programme.

Kasikornbank (KBANK) is also reportedly considering various capital management methods to increase shareholder returns.