2 weeks Ago
The Government Savings Bank (GSB) has the view that non-performing loans (NPLs) in the financial system have already peaked. According to GSB president Vitai Ratanakorn, factors expected to benefit the bank include the anticipated improvement in non-performing loans (NPLs), which are believed to have surpassed their highest level, supported by overall economic recovery, along with a rebound in the extension of new loans. Meanwhile, inflation is projected to gradually fall within the target range, with expectations that it will reach this target next year.
Challenges for commercial banks' performance in 2025 include a likely reduction in the policy interest rate. This trend will affect the net interest margin (NIM) of commercial banks across the system, leading it to decline accordingly. He explained that considering the broader picture of commercial banks' performance over the past several years, the continued increase in the policy interest rates led to a rise in their NIM, which in turn boosted profits.
However, this trend is expected to reverse from now on, with the banks' NIM expected to decline. The extent of the decline will depend on the reduction in the policy interest rate and the corresponding decrease in lending rates by the banks. According to Mr Vitai, the adjustment of lending and deposit interest rates is typically unequal, affecting low-income individuals in particular.
For example, when the repurchase rate is reduced by 0.25 percentage points, some banks may only lower their lending rates by 0.125 percentage points, with some reducing rates exclusively for high-risk or problematic groups.
However, he noted that the downward trend in interest rates impacts state financial institutions more than private commercial banks. This is because state institutions must operate in accordance with government policies in various projects. On the subject of the GSB specifically, beyond debt restructuring initiatives in collaboration with the government, there are additional projects such as flood relief, interest rate reductions for high-risk groups and soft loan programmes for non-bank entities, he said.
Given the GSB's targets in 2025, the bank aims to extend new loans amounting to about 80-100 billion baht, compared to the outstanding loan balance of 2.3 trillion in 2024. Of this amount, around 15–20 billion baht will be allocated for social lending.
In terms of deposits, the bank aims to increase them by 100 billion baht, up from the deposit balance of 2.7 trillion baht in 2024. As for profits, the bank projects figures of about 27 billion baht in 2025 and plans to increase its loan-loss reserves.
Currently, the reserves stand at 132 billion baht..
