NPL&REO News

Credit to construction companies falls by 2.4% in 2021, to €27.2 billion

Credit granted to construction companies fell by 2.4% in 2021, following the general trend in business financing, according to the report ‘Evolución del crédito a empresas por sectores de actividad en España 20210, published by AIS Group, a consultancy firm specialising in the application of artificial intelligence solutions to risk management.

The report puts the balance of the credit portfolio in this sector at 27.235 billion euros in 2021, which is up to 660 million euros less than in the previous year, with construction being the sector that has most accelerated the decline in the need for financing.

According to the study, the indebtedness of construction companies is returning to the downward trend that began in 2008 and was only interrupted in 2020 due to the arrival of the coronavirus, when it grew by more than 7%.

As far as defaults are concerned, the trend has also been downward for decades and the pandemic has not reversed it either. Specifically, as of December 2021, the balance of non-performing loans (NPL) granted to construction companies had fallen by around 250 million euros, to just over 2.3 billion euros.

In any case, despite the fact that its portfolio of doubtful loans continues to shrink, construction reaffirmed its position in 2021 as the sector with the highest NPL ratio, at 8.5%. The Bank of Spain has already issued repeated warnings in recent months that institutions should be very vigilant because a considerable increase in NPLs is expected in the short term.

Original Story: Original Story: El Confidencial Digital |Europa Press 
Photo: Photo by Svilen Milev in FreeImages
Edition and translation: Prime Yield

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