TMBThanachart Bank (ttb) has initiated stress tests to gauge the risks and potential impacts of US tariffs on Thai exports.
Piti Tantakasem, chief executive of ttb, said at its shareholder meeting on Monday the Bank of Thailand mandated banks, particularly Domestic Systemically Important Banks (D-SIBs), conduct stress tests to prepare for potential risks and impacts arising from tariff-related factors. Ttb is one of six D-SIBs in Thailand.
As part of the stress test, the central bank outlined various risk and impact scenarios to ensure that banks are equipped with appropriate response plans.
"The stress test will help banks, to some extent, anticipate risks and prepare mitigation strategies. However, it is still too early to clearly assess the impact on customers and the bank's loan portfolio," he said.
Although the trade war benefited Thai exports in the first quarter of this year, the impact is expected to materialise from the second quarter onward, said Mr Piti.
During the pandemic, similar stress tests involved collaboration at various levels, including the Thai Bankers' Association, the central bank, and the government sector.
Mounting Headwinds
The US reciprocal tariffs on Thai imports are expected to increase pressure on the banking sector's operations this year, amid rising economic challenges both domestically and globally.
"Given the economic headwinds, 2025 will be a particularly challenging year for income generation," said Mr Piti.
However, ttb expects to maintain its profitability this year, building on the strong net profit recorded in 2024, supported by its three core business strategies: selective loan growth, robust risk management, and effective cost control.
Auto and mortgage loans remain the bank's key strategic products. Thailand's automotive industry and car lending market have continued to improve this year and are expected to perform better than in 2024, he said.
The central bank's debt relief programme "You Fight, We Help" is also expected to help reduce vehicle repossessions, said Mr Piti.
For mortgages, the bank is focusing on debt refinancing rather than new home loans, in line with greater opportunities in the refinancing segment. As a result, the bank expects both business segments to contribute positively to its income this year.
Cost Control, Asset Quality
Digital transformation remains a key focus for enhancing business capabilities and managing operating costs. Digital banking transactions account for 80-90% of ttb's total retail banking transactions.
Through prudent and selective loan growth, the bank aims to improve asset quality and better manage financial costs. Although its non-performing loan (NPL) ratio rose to 2.75% in the first quarter of 2025, up from 2.56% year-on-year due to a smaller loan portfolio, the total NPL amount declined to 35.8 billion baht from 36.5 billion.
Mr Piti said the bank expects to keep its NPL ratio below 2.9% by year-end, despite economic headwinds.
On Monday, ttb's shareholders approved the acquisition of an 89.97% stake in Thanachart Securities from Thanachart Capital. This strategic move aims to enhance the bank's long-term revenue through a more comprehensive range of financial services.
The bank wants to increase its return on equity to double digits over the next three years from 8.6% now, he said.
"Given the positive trajectory of digital transformation, ttb sees no need for a virtual bank licence. For us, a virtual bank would only increase costs without generating additional income," said Mr Piti.