What To Know
- According to Kasikorn Research Center (K-Research), the risks are becoming harder to contain, particularly in the hospitality sector, where both special mention loans and non-performing loans (NPLs) are climbing at an alarming rate.
- While most borrowers—about 95%—remain in the “normal” repayment category, distressed customers recorded the fastest growth in early 2025 at 6.
Bangkok Business News: Rising Concerns Across Key Industries
Thailand’s financial system is showing early signs of strain as four critical sectors—manufacturing, hospitality, retail, and construction/real estate—face mounting repayment challenges. What began as an issue among small enterprises is now spreading to larger businesses, creating deeper concern among lenders and regulators. According to Kasikorn Research Center (K-Research), the risks are becoming harder to contain, particularly in the hospitality sector, where both special mention loans and non-performing loans (NPLs) are climbing at an alarming rate. This Bangkok Business News report underscores that companies with loan portfolios exceeding 500 million baht are no longer immune to financial pressures.
The Thai economy is really in a distressful state
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Hospitality Sector Under Pressure
The hospitality industry has borne the brunt of this financial turbulence, with sluggish foreign tourist arrivals and a weaker economic outlook hitting revenues. In the first quarter of 2025, loans overdue by 30 to 90 days reached 2.23% of total credit outstanding, while those overdue by more than 90 days surged to 3.95%. Large-scale operators, once considered resilient, saw debt defaults rise sharply during this period. Analysts warn that without urgent relief measures, the ripple effects could stall recovery efforts for years.
Distress Spreads Beyond Small Enterprises
Borrower classifications by K-Research highlight the growing risk. While most borrowers—about 95%—remain in the “normal” repayment category, distressed customers recorded the fastest growth in early 2025 at 6.9%. In comparison, new impairments rose 3.2%, while on-off customers grew 1.4%. The trend is particularly visible among medium- and large-sized businesses, many carrying debts between 100 million and 500 million baht. The spread of repayment difficulties beyond micro and small enterprises signals a broader and more concerning financial instability.
Calls for Tailored Debt-Relief Measures
Experts agree that a uniform policy will not solve the growing debt problem. Relief measures must be carefully designed around repayment capacities to prevent healthy borrowers from falling into default. For firms still making payments but bracing for difficulties, temporary repayment adjustments could provide critical breathing room. K-Research has also suggested that reviving the asset warehousing program could prevent a fresh surge of loans turning into NPLs.
Legal and Structural Support Urgently Needed
For borrowers who already face NPL status, promoting out-of-court workouts and encouraging debt settlement through asset transfers could help minimize losses. Lowering property transfer fees, such as for land and buildings, would also reduce barriers in the process. K-Research further stresses that dragging out overdue payments only increases risks of permanent default, making faster legal proceedings essential to restore financial clarity and allow businesses to recover more quickly.
A Warning Signal for the Economy
Thailand is now facing a critical test of financial resilience. The rapid rise of distressed debts, particularly among industries central to the country’s growth, highlights the urgent need for targeted, sector-specific intervention. Without immediate measures, the risk of escalating defaults could undermine investor confidence and strain long-term recovery. How swiftly and effectively policymakers respond will determine whether the situation stabilizes or spirals into a nationwide financial storm.
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