Spanish banks already cleaned up €130 billion in NPL from its balance sheets

The financial entities working in Spain have already cleaned up almost € 130 billion in non-performing loans (NPL) from their balance sheets in less than six years, since December 2013 when the NPL ratio totalled its historic peak of 13.61%.

Then, the NPL in the hands of the banks amounted to € 197.045 billion, comparing to the € 67.795 billion recorded in May 2019 – regarding a total credit volume of € 1,448 billion, once again, very much lower than the € 1,202 billion of last May. As a result, the NPL ratio stood at 5.64% in the end of May, hitting its lower since September 2010 and being almost eight percentual points below its peak.

The gradual improvements in the Economy and Employment, together with refinancing granted by the bank and the sales of NPL portfolios to investment funds have contributed to this NPL fall, which could reach the 5.35% by the end of the third trimester of 2019, according to the rating agency Axesor.

Still, the default ratio of real estate and construction companies should be 7.12% in the end of the third trimester, with € 7.541 billion in non-performing assets, adds Axesor. In the first quarter of 2019, this ratio stood at 9.9%, comparing with its high of 37% reached in December 2013.

The credit granted to societies related to real estate should keep falling over the next few months and is expected to hit the € 110.438 million by the end of the third quarter, far bellow the € 0,5 billion recorded in 2009.

Original Story: Expansión | Author: Expansión
Photo: Photo by Pablo Rodríguez from FreeImages
Edition & Translation: Prime Yield