Virtual banks face growth, profitability tests in Thailand, brokerage says

Thailand's nascent virtual banking sector faces significant growth and profitability tests, according to Kiatnakin Phatra Securities (KKPS). The brokerage projects the combined loan portfolio of the nation's three virtual banks to reach 200 billion baht in five to six years.

This expansion is contingent on meeting the Bank of Thailand's capital requirements, which mandate an increase to 10 billion baht per bank in the second phase of operations. Globally, virtual banks' profitability is heavily influenced by their business models and income sources. A study of 45 international virtual banks revealed an average break-even period ranging from one to nine years.

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For the initial stage, we expect the lending services of local virtual banks to help narrow the gap between formal and informal lending.

Globally, virtual banks often prioritize deposit growth before venturing into lending, insurance, and investment products. While lending is a key profit driver, building substantial loan portfolios and achieving sustainable earnings takes time. In Southeast Asia, virtual banks have historically focused on deposits for the first three years. KKPS will closely monitor the Thai virtual banks' strategies, particularly their focus on providing loans to unserved and underserved customers, aligning with central bank goals. Initial offerings are expected to be unsecured loans, with a gradual shift towards secured lending.

This initiative aims to address the significant informal lending market in Thailand, which currently represents about 16% of the country's GDP. The Thai banking industry's total outstanding loan portfolio was 22.6 trillion baht in February 2026, with consumer finance making up 1.43 trillion baht. Unsecured and digital personal loans form the largest segment of this consumer portfolio. Total deposits in the banking sector stood at 24.7 trillion baht.

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Informal lending currently accounts for around 16% of Thai GDP.