Net interest margins weaken profits
Fitch Ratings expects Thai banks' asset quality to deteriorate further this year, while the negative outlook for the country's sovereign rating could weigh on the credit profiles of some banks.The credit rating agency maintained a "deteriorating" outlook for the Thai banking sector for 2026, according to its Peer Credit Analysis report released on Monday.
The banks covered include Thailand's domestic systemically important banks: Bangkok Bank, Krungthai Bank (KTB), Kasikornbank, Siam Commercial Bank, Bank of Ayudhya, and TMBThanachart Bank (ttb).
According to Fitch, the deteriorating outlook reflects expectations that the major banks' profitability will be pressured by lower net interest margins and a weak economic environment, which is likely to suppress loan growth.
Despite these challenges, the agency expects earnings and core profitability metrics to remain within the implied "bbb" category, albeit with some deterioration this year.
