Major Thai banks are expected to report softer earnings in the third quarter of 2025, following the Bank of Thailand’s policy rate reduction in August from 1.75% to 1.50%. The rate cut, aimed at bolstering economic activity, has weighed on net interest margins (NIMs), pressuring sector profitability.
According to LSEG consensus estimates, SCB X (SCB) is projected to record a modest year-on-year (YoY) earnings increase of 1.44% but a significant 13.20% quarter-on-quarter (QoQ) decline. Kasikornbank (KBANK) is expected to post a 5.59% YoY drop and a 9.54% QoQ decrease, while TTB Bank’s (TTB) earnings are forecast to slide 5.67% YoY and 1.42% QoQ. Tisco Financial Group (TISCO) and Kiatnakin Phatra Bank (KKP) are anticipated to report YoY declines of 7.10% and 2.73% respectively, with both also seeing QoQ contractions.
Krungthai Bank (KTB) stands out as the sector’s bright spot, with expectations for a robust 20.11% YoY and 19.96% QoQ surge in profits.
Maybank Securities Thailand (MST) notes that while the bank sector has outperformed the SET by 13% year-to-date, further upside in share prices appears limited, especially as lower NIMs threaten sector earnings. Nevertheless, MST believes downside risk is buffered by strong dividend yields. Among Thai banks, Bangkok Bank (BBL) is highlighted as MST’s top pick due to its diversified income streams, solid balance sheet, and undemanding valuation—currently trading at just 6x FY25E PER. MST suggests that any share price weakness following third-quarter results could present an attractive accumulation opportunity.
The sector’s third-quarter net profit is estimated at THB53.4 billion, representing a 2% YoY and 5% QoQ dip. Despite steady investment gains, most large banks are likely to report lower earnings QoQ, with the exception of KTB, which is expected to be driven in part by substantial mark-to-market gains on investments—including a reported THB14 billion boost from its holdings in Thai Airways.
For mid- and small-sized banks, earnings are expected to have softened slightly due to tepid loan and revenue growth, though asset quality and non-performing loan (NPL) ratios are anticipated to have remained stable.
Sector provisions are forecast to have risen 2% both YoY and QoQ, particularly for KTB and TISCO. Meanwhile, BBL and TTB are expected to show lower credit costs following front-loaded provisioning in the first half of 2025. The sector’s NPL ratio likely rose 10 basis points QoQ to 3.83%. Loan growth remains subdued, as total sector loans decreased 2% YoY in 3Q25 amid substantial repayments by corporates and the government. Banks have responded by tightening loan-approval criteria, especially for SMEs and high-yield retail loans.
As BBL, KTB, and TTB rank among the top five shareholders of Thai Airways, unrealized gains from their investments in the airline are set to appear in their third-quarter results. KTB is expected to have booked notable gains and set aside extra provisions to smooth future earnings volatility. TISCO, too, is projected to have recorded such gains. Meanwhile, BBL and TTB will recognize much of their gains via other comprehensive income, directly boosting equity rather than profit or loss. BBL’s book value is estimated to have increased THB13 per share (up 4% QoQ) from THB25 billion in investment gains, while TTB likely realized about THB6.1 billion.
As the banking sector enters the last quarter of 2025, investors will be closely watching banks’ strategies to manage shrinking NIMs, loan growth challenges, and the evolving macroeconomic landscape.
However, Krungsri Securities (KSS) has a different view. The firm anticipates that seven major Thai banks—Bangkok Bank (SET: BBL), Kasikornbank (SET: KBANK), Krungthai Bank (SET: KTB), SCB X (SET: SCB), TMBThanachart Bank (SET: TTB), Kiatnakin Phatra Bank (SET: KKP), and TISCO Financial Group (SET: TISCO)—will collectively post a combined net profit of THB 58 billion for the third quarter of 2025. This figure implies an increase of 6% year-on-year and 3% quarter-on-quarter.
The brokerage firm attributes this earnings growth mainly to a substantial rise in non-interest income (Non-NII), which is expected to jump 42% year-on-year and 20% quarter-on-quarter. The surge is driven primarily by higher Fair Value Through Profit or Loss (FVTPL) gains at KTB, following the bank’s investment activity in Thai Airways International (SET: THAI).
Krungsri maintains a ‘Value Play’ investment theme for the banking sector, noting that Thai banks continue to offer attractive dividend yields—estimated between 6% and 9% annually. For 2025, the firm highlights asset quality management, including credit costs and non-performing loans (NPLs), as pivotal topics to monitor.
Nevertheless, KSS believes banks can keep these metrics under control at the current stage. The analyst continues to name KTB and SCB as its top picks for the sector.
Krungsri projects the sector’s net interest margin (NIM) to dip to 2.77% in 3Q25, down from 3.16% in 3Q24 and 2.88% in 2Q25. The decline is attributed to policy rate cuts in April and August 2025, expansion of lending to lower-risk segments, and efforts to reduce interest burdens for borrowers under government support programs.
The total loan portfolio is forecast to contract 1.6% quarter-on-quarter, equivalent to a 2.4% drop year-to-date, as all major loan categories have shown declines.
Expected credit loss (ECL) is likely to rise 3% year-on-year and quarter-on-quarter due to additional management overlays and lingering uncertainties in the economic recovery. As a result, the NPL ratio is projected to increase slightly to 3.80% from 3.75% in the previous quarter.
