Kris Chantanotoke, chief executive of Siam Commercial Bank (SCB), said the Thai banking industry will continue to face challenges from sluggish economic growth amid persistently high household debt, which he described as a structural weakness in Thailand’s economy, reports the Bangkok Post.
In the second quarter of 2025, Thailand’s household debt-to-GDP ratio was 86.8%, limiting borrowers’ ability to access additional credit. This poses a direct risk to banking operations, particularly in an environment of slowing economic growth, he said.
Meanwhile, Thailand’s economy faces headwinds from both external and domestic factors. SCB’s Economic Intelligence Centre (EIC) forecasts GDP growth of 1.5% in 2026, in line with the Bank of Thailand’s assessment.
"This pace reflects growth below potential and heightened economic fragility. As a result, 2026 will be another challenging year," Mr Kris said.
The 1.5% growth would be the Thai economy’s weakest performance in three decades, excluding crisis years, down from an estimated 2% in 2025. External pressures include a global economic slowdown, trade tensions, and intensifying foreign competition.
Domestically, structural constraints such as household and business fragility, weak purchasing power, fiscal limitations, and political uncertainty continue to weigh on growth.
Beyond weak economic fundamentals, Mr Kris said a self-fulfilling prophecy is weighing on sentiment and could further undermine confidence among households and businesses.
A self-fulfilling prophecy is a psychological phenomenon where a person’s expectations or beliefs about a situation or someone else influence their behaviour, leading to actions that cause the original expectation to come true, whether positive or negative.
"The most dangerous risk may not be the economic fundamentals themselves, but a climate of fear that could trigger a self-fulfilling prophecy and lead to inaction in economic decision-making," he said.
Despite subdued GDP growth and high household debt, SCB plans to pursue positive loan growth in 2026 under a selective strategy. The bank will focus on corporate lending, mortgages, and auto loans, while carefully managing risk.
SCB, Thailand’s fourth-largest bank by total assets, plans to resume growth in auto loans in 2026 after previously slowing expansion due to intense price competition, particularly in the electric vehicle segment, which distorted market pricing. Mr Kris said market conditions have since begun to normalise.
Among small and medium-sized enterprises, SCB plans to expand lending selectively. However, the bank will primarily focus on retaining its existing customer base and providing financial support, rather than aggressively acquiring new clients, to safeguard asset quality amid higher credit risks in the sector, he said.
As it targets positive loan growth in 2026, SCB will also place strong emphasis on asset quality. The bank aims to keep non-performing loans (NPLs) at appropriate levels in line with economic conditions, making the balance between growth and quality a core strategy.
"A dual mandate is required ‒ achieving loan growth while preventing a rise in NPLs. We have restructured internal operations to support loan expansion while controlling bad debt," Mr Kris said.
In addition, SCB is ready to collaborate with the government and regulatory authorities to support Thailand’s economic growth and assist vulnerable borrower segments amid a fragile economic environment. The bank stands prepared to participate in government debt-resolution and credit-support schemes.
From a private-sector perspective, Mr Kris said comprehensive economic reform is necessary to strengthen Thailand’s economic fundamentals and sustain long-term growth. He noted that the government has introduced several reform measures, particularly the medium-term fiscal framework, aimed at improving fiscal discipline and increasing tax revenue.
"With tax reform, the government needs to build public understanding, particularly when people are required to pay higher taxes. This remains a key challenge in reforming the economy and addressing the country’s structural problems," Mr Kris said.
As a result, collaboration among all relevant stakeholders is required to strengthen Thailand’s economy. The banking sector is ready to play a pivotal role in supporting the country’s economic reforms through the Thai Bankers’ Association.
For example, the association can provide digital payment tools to support government budget transfers under various economic programmes. In addition, the private sector has submitted policy recommendations to the government through a white paper titled Reinvent Thailand, he said.
According to SCB EIC, Thailand’s economy stands at a critical turning point, facing mounting pressures on multiple fronts.
Structural reform is imperative, requiring the government to build on existing initiatives and accelerate decisive policy action.
With a focus on long-term competitiveness, the strategy is to emphasise upgrading business support measures and restructuring the economy in partnership with the private sector, such as removing investment barriers and promoting high-potential industries through a reform platform in collaboration with businesses.
Separately, Chartsiri Sophonpanich, president of Bangkok Bank (BBL), said Thailand’s GDP growth in 2026 is expected to remain below 2%, indicating continued expansion below potential. As a result, helping customers overcome economic challenges will be a primary focus of the bank’s operations in 2026.
"Under this scenario, the bank needs to work at full capacity to help clients adapt to a changing environment and find solutions that enable them to continue operating and identify new opportunities both domestically and internationally," he said.
In a low-growth environment, banks can no longer function solely as lenders, Mr Chartsiri said. Instead, they must fully leverage their domestic and international networks to provide broader support to customers.
BBL, Thailand’s largest bank and the country’s leading international banking institution, is committed to continuing to support clients in accessing new markets and exploring investment opportunities aligned with each customer’s capabilities and potential.
"The ultimate goal is to ensure clients’ business activities can proceed smoothly, which in turn will help support overall economic growth," Mr Chartsiri said.
For 2026, BBL expects positive loan growth across customer segments, including large corporates, mid-sized enterprises, and retail lending. However, growth rates will vary by segment, depending on demand and growth potential.
Regarding asset quality, Mr Chartsiri said the bank’s NPLs in 2026 are expected to remain manageable. BBL will continue to apply its longstanding credit screening standards, with no plans to tighten or loosen criteria. The bank’s approach focuses on close engagement with borrowers and targeted support to help maintain debt quality.
He noted that ongoing government efforts are likely to help to reduce debt burdens and mitigate the country’s household debt. For NPL management, BBL already operates its own asset management company (AMC) and has a well-established internal process, making it unnecessary to establish a new AMC or adopt measures used by some other banks.
BBL would also transmit monetary policy in accordance with the central bank’s accommodative monetary stance to support economic growth and ease borrowers’ financial burdens, particularly for vulnerable groups, he said.
In 2025, the Bank of Thailand’s Monetary Policy Committee cut the policy rate by 100 basis points to 1.25%, and commercial banks have complied with policy transmission.
On policy recommendations, Mr Chartsiri noted that the government is pursuing policy initiatives across several areas, particularly in promoting foreign direct investment, with public and private investment playing a critical role in supporting economic growth.
"Investment is the key engine for driving economic growth, strengthening Thailand’s economic structure, and enhancing its competitiveness within the region," he said.