Bank credit granted to families that is classified by Portuguese banks as being in default or on the verge of default (failure to pay within the agreed period) soared by almost 13 per cent in 2023, one of the highest figures in recent years, indicates the Bank of Portugal (BdP) in the new Financial Stability Report, published this Tuesday. According to the analysis by the central bank governed by Mário Centeno, the problem is essentially concentrated among poorer or lower-income families, who are finding it increasingly difficult to honour their instalment payments to the bank.
This problem – referred to as ‘stage 2 credit risk categories’, i.e. those that are in the corridor of potential default (non-performing loans or NPLs, whose customers fail to pay, which also includes non-performing loans, loans that have been unpaid for more than 90 days) – is a growing problem and is causing concern among the BdP.
The increase in level 2 credit at risk affects the consumer segment proportionally more, but it is in housing loans that the situation has deteriorated the most, warns the BdP.
‘Although the total ratio of non-performing loans (NPLs) continued to fall in 2023, from 3 per cent to 2.7 per cent of total loans, the truth is that there seems to be a more serious problem brewing.
‘Across the main institutions, the ratio of loans to individuals in stage 2 increased by 2.2 percentage points (p.p.) to 10.4 per cent, revealing the vulnerability of lower-income families to tighter monetary conditions,’ warns Centeno’s institution.
Original Story: Diário de Notícias | Author: Luís Reis Ribeiro
Edition and translation: Prime Yield