Thailand’s leading banks are navigating a complex landscape in which profitability pressures and sustainability expectations collide. Loan demand is slowing, non-performing loans (NPLs) are rising, and margins remain under strain — all while new regulatory guidelines on Sustainable Finance are reshaping how banks operate and measure success. The challenge is clear: how can financial institutions maintain profitability while meeting the growing demand for sustainable banking?
The Bank of Thailand’s guidelines, Internalizing Environmental and Climate Change Aspects into Financial Institution Business, mark a pivotal shift in the country’s financial landscape. Banks are now expected to embed sustainability into their core business practices. This is not just a compliance exercise but an operational and strategic imperative.
As banks navigate this new era of Sustainable Finance, the ability to connect profitability and purpose becomes a competitive advantage. That’s where msg global and SAP Profitability and Performance Management (PaPM) come in — helping financial institutions turn regulatory guidelines into business opportunities. By integrating ESG metrics, financial performance, and strategic decision-making within one transparent framework, financial institutions can easily balance profitability and sustainable business practices.
Sustainable Finance in practice
Thai banks are already demonstrating how sustainable lending drives real-world impact:
- Kasikornbank finances solar and wind power projects and issues green bonds.
- SCB supports social impact bonds and sustainable urban development.
- Krungthai Bank funds smart city and e-mobility initiatives under government sustainability programs.
These examples show that sustainability and profitability are not contradictions but reinforce and complement each other to drive growth.
Sustainability as a strategic growth driver
Sustainability has evolved from a compliance requirement into a key growth strategy. Thai banks are increasingly aligning their lending portfolios with ESG principles and channeling capital towards projects that deliver measurable environmental and social impact, including:
- Renewable energy (solar, wind, and hydropower projects)
- Sustainable agriculture and circular economy initiatives
- Green urban development and smart cities
- Energy efficiency and electric mobility
These sustainable finance initiatives have become a core part of modern banking strategy to strengthen long-term financial stability and gain access to international investors and global green capital markets.
Digital technology as a bridge
The future of banking lies at the intersection of sustainability and profitability, and digital technology makes that intersection possible. With SAP PaPM, banks can turn complexity into clarity by:
- Analyzing and simulating lending portfolios in real time
- Integrating sustainability metrics directly into financial steering
- Assessing ESG risks and opportunities transparently
- Measuring and managing green loans and social bonds
- Automating tax, compliance, and reporting processes
In doing so, SAP PaPM acts as a bridge between finance, risk, treasury, and ESG, helping banks evolve into data-driven, sustainable financial institutions.
The value of SAP PaPM
By implementing SAP PaPM, banks gain clear strategic advantages:
- Transparent profitability that pinpoints exact profitability and margin analysis across products, segments, and customer groups.
- Integrated sustainable finance by embedding ESG criteria directly into planning and reporting.
- Regulatory compliance and automated alignment with BEPS 2.0, OTP, and Bank of Thailand requirements.
- Real-time decision-making for faster responses to market and regulatory changes.
- Operational efficiency through unified data, harmonized processes, and advanced analytics across business areas.
Conclusion: a sustainable and profitable future
Thailand’s major banks are entering a new era in which sustainability, digitalization, and profitability are intertwined. By investing in data-driven profitability and sustainability management now, banks can gain competitive edges and influence the future of Thailand's financial system.
With msg global’s expertise and the power of SAP PaPM, move beyond basic reporting to truly measuring the value of sustainability — proving that purpose and profit can coexist.
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Markus Vogel
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