Thailand Q2: NPL ratio flat, but nearly half of new bad loans are re-defaults

Implications

Facts

Banking sector: Thai commercial banks' NPL ratio was 2.82% at end-Q2 2026 ¹ (vs 2.85% in Q1 2026); NPLs outstanding were THB 534.8 bn, the Stage 2 ratio 6.78%, and loan growth 2.0% year on year. SME and consumer lending continued to contract and banks continued pre-emptive restructuring. Source: BOT Banking Sector Quarterly Brief Q2 2026 (2026-08-18). New NPLs: loans newly classified as non-performing in Q2 totalled about THB 110 bn, of which THB 52 bn were new delinquencies and THB 52 bn re-defaults after restructuring. SME lending growth was −4.6% year on year, the lending book having contracted for 16 consecutive quarters. The large-corporate NPL ratio was 1.40% (up from 1.34% in Q1 2026). Pre-emptive restructuring stood at THB 490 bn and TDR at THB 720 bn. Source: BOT supervision official's briefing (The Nation, 2026-08-19). The two components sum to less than the reported total; the difference was not explained. Credit bureau: Luxmon Attapich, CEO of the National Credit Bureau (NCB), said Q2 data showed a clear rise in bad debts for the first time in several quarters, that nano-finance has a higher share of loans more than 90 days past due than other lending, and that such arrears on consumption-purpose personal loans have risen sharply. No specific figures were given. Source: The Nation (2026-09-07).

Analysis

The headline NPL ratio is broadly flat (vs 2.85% in Q1 2026), but the fact that about half of new NPLs are re-defaults after restructuring shows that problems deferred by past restructuring are returning. The stable ratio also reflects denominator growth (2.0%) and write-offs and sales, so the ratio alone understates the pace of deterioration.

By comparison, the NPL ratio of Vietnam's 27 listed banks was 2.01% in Q2 2026, below Thailand's 2.82%. Definitions and coverage differ (all commercial banks in Thailand versus listed banks in Vietnam), so direct comparison requires caution.

Counterpoints and uncertainties

The NCB chief's remarks came without figures, so the extent of deterioration in nano-finance and personal loans cannot be confirmed. The breakdown of new NPLs rests on an official's oral briefing and does not add up. The NPL ratio itself is flat, and there is not yet evidence that deterioration is accelerating.