NPL&REO News

10% of households with credit are in default

For the fourth month in a row there is an increase in the percentage of households in credit default situation, according to the latest data released by Portugal’s Central bank (BdP). And, in April about 10% of households with loans were unable to pay their instalments, the highest percentage since May 2018.

Overdue loans in consumer credit rose for the third consecutive month, to 6.8% from 6.7% in March. As for the mortgage loans, the default ratio stabilized at 4.4%.

The total amount of default credit by households fell in April to €2,429.8 mn, from the €2,445.7 mn in the previous month. 

The percentage of default is also increasing for nonperforming corporate credit. Withing the hospitality and F&B sector, 25% of the borrowers were in default in April, comparing with the 21,8% in March and the 21,3% recorded one year before. This increase corresponds to the forced lockout period due to the State of National Emergency established in March 18th and that last until May 2nd.. During that time, several companies closed – some of which permanently – and the unemployment rose, as well as the layoff. 

Before the pandemic crisis, the credit granted to households hit new records. During the first trimester of 2020, the credit applications rose to €4.9 billion. This increase was even felt in the consumer credit, which Portugal Central Bank has been struggling to brake with the reinforcement of limits for its concession.

Original Story: Dinheiro Vivo | Elizabete Tavares 
Photo: Photo by Hugo Humberto Plácido da Silva from FreeImages.com
Translation & Edition: Prime Yield

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