Fitch agency predicts a difficult 2022 for Spanish banks. The rating agency estimates that the financial sector will reach a peak in the default rate in 2022, which will be around 6.5% and 8%, although in any case it will depend on the evolution of the economic recovery.
Fitch Ratings expects Spanish banks’ asset quality to weaken as borrowers’ ability to pay comes under pressure from the consequences of the coronavirus crisis, particularly when the support and containment measures expire,” the agency said in a note.
In the opinion of the rating agency’s experts, in 2020 there was already “evidence” of a deterioration in asset quality due to the consequences of Covid-19, although non-performing loans fell to 4.2%, down from 4.5% at the end of 2019.
Nevertheless, Fitch stresses that throughout the year, especially in the fourth quarter, banks have been identifying potential risks and have increased the number of loans classified as Stage 2, i.e. on special watch, the step prior to considering them doubtful. “SME and consumer lending will be the sectors most vulnerable to economic stress,” he concludes.
Original Story: El Independiente | Elena Lozano
Photo: Photo by Lotus Head in FreeImages.com
Translation: Prime Yield