KBank warns of rising bad debts as economic pressures mount, urges focus on business adaptation

Amid the pressures of Thailand's slowing economy, exacerbated by the new wave of the trade war with the U.S. and pre-existing structural weaknesses in Thai businesses that were already present before the Covid-19 pandemic, these factors have intensified the situation. There is now a noticeable increase in the "weakness" among the general population, including a rise in defaults by debtors. This has led to a growing number of delinquent payments across various businesses and credit sectors.

This is reflected in the increasing non-performing loans (NPLs) within the Thai commercial banking sector, as reported in the first quarter of this year. The NPL ratio has risen from 2.78% to 2.9%, with the most significant increases coming from SME loans in nearly every sector. The Bank of Thailand (BOT) has also observed that NPLs are beginning to rise in the high-income group as well.

This aligns with data from publicly listed companies on the Stock Exchange of Thailand (SET) from 2023–2025, which shows that many companies are facing a cash flow shortage, which has severely impacted their financial positions and wealth. Notable cases include:

• RS Group (RS), which reported a default on interest payments and loans to financial institutions.
• Italian-Thai Development (ITD), which has accumulated significant losses, high debt, liquidity issues, and upcoming long-term debt repayments.
• Jasmine Technology Solutions (JTS), which reported insufficient funds to redeem its bonds.
• CH. TAVEE (CHO), which has defaulted on bond payments and interest.
• Clover Power (CV), which has also defaulted on multiple bond interest payments.
• JKN Global Group (JKN), which has defaulted on loans from financial institutions and bonds, leading the company to apply for business rehabilitation.

KASIKORNBANK Warns of High Economic Uncertainty

Pipit Aneaknithi, President of KASIKORNBANK (KBank), stated that the global economic uncertainty and volatility are not only affecting SME loan portfolios and retail borrowers, but are now also impacting large businesses. He observed an increasing number of problems as businesses show signs of weakness, particularly in the loan portfolios, where issues with accounts and payments have become more frequent.

Pipit called the situation "concerning," noting that the bank has been actively providing support to customers, including facilitating debt restructuring before it leads to non-performing loans (NPLs). This includes extending repayment terms, such as changing from 3 years to 5 years, to help struggling borrowers.

The ongoing issues are spread across various industries. Some sectors, like exports and textiles, were already affected by previous disruptions, including the Covid-19 pandemic, and these industries will need to be closely monitored going forward.

The trade war has also exacerbated these issues. While some export sectors are still able to sell goods, their sales are driven by temporary factors such as preemptive orders before the U.S. tariff measures come into effect. Moving forward, these sectors will require increased attention.

“We have been providing more in-depth support, including examining business cash flows, as a way to help our clients resolve problems and adjust their structures,” Pipit said. “Because the role of a bank is not just to seize assets; we are not criminals. Our job is to communicate and work through these challenges together. We don’t just abandon clients.”

Credit Slows Down in the First Five Months

However, in terms of lending, the bank has had to tighten its policies, continuing from when U.S. President Trump announced the import tariff measures. These developments have been reflected in the overall financial sector, where credit growth has been stagnant. Over the past five months, there has been a continuous weakening of credit, and looking ahead, it is expected that credit figures will likely remain similar under the current economic conditions.

As for the bank's growth targets, it has not adjusted its financial goals. It had originally expected credit to remain steady compared to 2024, with non-performing loans (NPLs) projected to be under 3.25%. The NPL ratio for Q1 was 3.18%.

The bank will await further clarity from the trade war after the 90-day grace period ends, along with the results of U.S.-Thailand negotiations, which are expected to be clearer by mid-year. After that, the bank will reassess its growth targets. If the U.S. continues to maintain the 36% import tariff on Thailand, it is anticipated that businesses and the Thai economy will face more difficulties.

“The bank has been cautious in its lending for a long time, especially as global conditions worsen and our customers’ situations decline. No one is coming to apply for additional loans. It’s not that the bank doesn’t want to lend, but the current situation does not support it. So, amidst these challenges, from the bank’s perspective, we need to shift from being just creditors to finding other revenue sources, including synergies between businesses in our group and investments in foreign funds,” said Pipit.

Gulf Increases Stake in KBank as Part of Business Growth Strategy

Regarding Gulf Development Co., Ltd. (GULF), which has has continued to increase its stake in KBank, Pipit said that this move aligns with Gulf’s business growth strategy, as KBank is seen as an integral part of Thailand’s capital market.

In terms of investment, it is not possible to prevent anyone from purchasing shares in a bank, given that KBank engages with investors worldwide, he said.

When asked what attracts investors to invest, Pipit explained that the first thing investors look at is the company’s financial performance.

“We cannot stop anyone from buying shares. Can we stop investors from Singapore, the U.S., or the U.K. from purchasing shares? No, because we are part of the capital market mechanism. If a company performs well, investors will naturally take an interest. And, as we have seen with our roadshows around the world, it is normal for investors to get to know us,” said Pipit.

Raising Sustainable Loan Target to Over 200 Billion Baht

Kattiya Indaravijaya, CEO of KBank, announced that the bank has raised its target for sustainable loans to over 200 billion baht. This was revealed at the bank's recent large-scale forum, “EARTH JUMP 2525: Transition thru Turbulence,” under the theme of "Transition." The event highlighted the ongoing global changes and challenges, including economic volatility, trade conflicts, and the rise of new technologies such as AI.

She discussed the global factors affecting Thailand, particularly the trade war, the global economic slowdown, and the climate crisis, which have led to environmental disasters like floods, earthquakes, and wildfires. These challenges have increased public anxiety, often likened to being in a “hellish” situation due to the uncontrollable aspects of these crises.

Therefore, the only option is to move forward, adapt, and “move faster,” she stated.

Under the EARTH JUMP theme, Kattiya emphasized three key areas related to sustainability:

1. Health Check – Assessing the health of both the organization and its operations. In 2024, the bank’s operations emitted 72,000 tons of greenhouse gases, with 48 million tons emitted through the loans the bank provided to customers for producing goods and services. This discrepancy in emissions is 680 times higher in terms of credit activities. Therefore, “transition” is not just about the bank, but also helping customers transition to Net Zero.

2. Commitment – The bank is committed to achieving Net Zero in its operations by 2030. The bank’s loan portfolio will align with the country's sustainability goals, with plans to provide 1-2 trillion baht in loans and investments for the green transition. Currently, KBank has already issued 150 billion baht in green loans. If demand for sustainable loans increases, the bank is ready to raise the target further.

3. Solution – The bank is already taking action, such as installing solar rooftops, switching to EVs, and reducing paper use. The bank is confident that by 2030, it will achieve Net Zero. The goal is not just to provide loans but to create a complete ecosystem under the concept of KBank’s Climate Solutions.

Finally, the bank hopes that EARTH JUMP 2525 will help everyone navigate these turbulent times effectively, as no one can control the storm or changes. Instead, it is about using available knowledge and tools to predict, manage, and move forward.

 

Thailand at an Economic Crossroads

Pipit stated that Thailand is currently at a “critical juncture”, facing pressures from the trade war, the emergence of new alliances, and climate challenges. He noted that today the world is not just facing a trade war, but also a reset of global economic rules. If Thailand can adapt wisely in this new world, there is an opportunity to become a winner by driving the Green Transition, particularly through investments in Green Tech, Green Finance, and Green Governance. He warned that if Thailand does not take action, it may not only be left behind but could lose its position in the new global economic system.

Regarding transition financing, KBank has already provided 150 billion baht in loans and expects that sustainable loans will reach 200 billion baht by the end of the year. The bank is preparing to increase sustainable financing further, aligning with the country’s carbon reduction plan or NDC 3.0 (Nationally Determined Contribution), which will serve as a critical turning point for the financial sector, industry, and national public policy.

KBank has been focusing on key industries for the transition, including the energy, coal, oil and gas, and cement sectors, which are major contributors to emissions control. Moving forward, the bank will also focus on aluminum and automotive industries.

“We will continue to complete the puzzle on both the supply side and demand side, planning to align our lending with the potential of customers in each industrial sector. Historically, Thailand has been a follower of global economic rules and has often been at a disadvantage. However, this time, if we can shift from being followers to designers by creating new financial mechanisms, there is a chance we can transform into winners in the Green Transition global game,” Pipit concluded.