Bank of Ayudhya, controlled by Japan's Mitsubishi UFJ Financial Group (MUFG), posted a net profit of 5.2 billion baht ($158 million), above an average forecast of 4.99 billion baht by two analysts polled by Reuters.
The bank's loans dropped 0.1 percent in the quarter, while non-performing loans (NPLs) stood at 2.28 percent of total loans at end-March, up from 2.24 percent at end-December, it said in a statement.
Despite a contraction in the first quarter, the bank maintained its loan growth target of 5 to 6 percent for 2016 on expectation the country's economic recovery would gain momentum in the latter part of the year, president and CEO Noriaki Goto said in the statement.
The acceleration in government spending and robust growth in the tourism sector should support the economy, which the bank expected to grow 3.2 percent this year, Goto said.
Bank of Ayudhya had earlier said it planned to join with MUFG to expand into Southeast Asian countries, especially Cambodia, Laos, Myanmar and Vietnam.
After opening a representative office in Myanmar in 2015, the Thai bank acquired Hattha Kaksekar, Cambodia's fourth largest microfinance lender. It is also studying the possibility of operating in Vietnam.