Thai banks are raising concerns over a potential rise in non-performing loans (NPLs) as prolonged geopolitical tensions in the Middle East continue to drive up global oil prices, increasing cost pressures across the economy.
Higher oil prices are feeding through to transport costs, electricity bills and overall living expenses, weighing on consumer purchasing power and weakening borrowers’ repayment capacity. Financial institutions are now closely monitoring the situation amid fears that debt quality could deteriorate if the crisis persists.
Thakorn Piyapan, president of TMBThanachart Bank, said rising oil prices have a direct impact on transport and energy costs, which in turn are likely to push up the cost of living and reduce disposable income.
He noted that while current repayment trends across loan portfolios have not yet shown clear signs of deterioration, prolonged economic pressure could affect borrowers in the future.
“We are monitoring the situation closely. At present, there are no clear signs of stress in our loan portfolio, but if the situation drags on, the impact is inevitable,” he said.
Mortgage lending remains subdued and is unlikely to worsen significantly, while auto loans may see a shift in demand towards electric vehicles, reflecting changing consumer behaviour.
Banks are also adopting a more cautious stance, with a “wait-and-see” approach to investment. Measures include reviewing budgets, delaying unclear projects and encouraging remote working to reduce costs.
Financial institutions are also conducting stress tests to assess risks under scenarios of higher oil prices, rising inflation and potential supply chain disruptions.