The volume of doubtful loans at Spain’s financial credit institutions (ECFs) dropped to €2.404 billion in June, reaching its lowest level since May 2008, according to the latest data released by the Bank of Spain.

These institutions specialize in specific credit areas such as consumer loans, mortgages, credit cards, guarantees, leasing, and factoring, but unlike traditional banks, they are not permitted to accept deposits.

Most Spanish banks operate their own financial arms to support consumer credit, while other companies—including major supermarket chains and vehicle manufacturers—also run financing entities to offer credit to customers purchasing their products or services.

In June, the stock of doubtful loans held by these financial institutions decreased by €166 million compared to May, and by nearly €2.9 billion year-on-year. This brought their non-performing loan (NPL) ratio down to 5.42%, the lowest since December 2019, before the COVID-19 pandemic, down from 6.03% the previous month and 6.43% a year earlier.

This improvement was supported by an increase of €1.73 billion in new loans granted, pushing the total loan portfolio to €44.3 billion in June, although still €527 million lower than in June 2024.

While ECFs typically have higher delinquency rates than deposit-taking banks, their overall credit volume remains significantly smaller. For comparison, traditional deposit banks reported an NPL ratio of 2.89%, with a loan portfolio totalling €1.13 trillion.

Original Story: Europa Press
Edition and translation: Prime Yield