The nonperforming loans (NPL) ratio of Spanish banks fell to 3.50% in June, after increasing to 3.59% in May, according to provisional data published by the Bank of Spain.

Thus, the NPL ratio fell by 38 basis points compared to June 2022 and remained at its lowest level since December 2008, when it stood at 3.37%.

The decrease is explained, on the one hand, by the €655 million reduction in the volume of doubtful loans held by deposit institutions and financial credit institutions, to €42.173 billion, the lowest volume since July 2008. Compared with the same month in 2022, doubtful loans decreased by €5.743 billion.

On the other hand, total credit granted rose in June by €13.667 billion, to €1.2 trillion. However, the slowdown in lending can be seen in the year-on-year comparison, as the volume of credit fell by €28.948 billion compared with June last year.

The figures include the methodological change in the classification of Financial Credit Establishments (EFCs), which since January 2014 have ceased to be considered as credit institutions.

Excluding the change, the NPL ratio would stand at 3.59% in June, since the credit balance was €1.174 trillion in that month, when excluding the credit of CFCs.

The data broken down by type of institution show that the doubtful assets ratio of all deposit institutions (banks, savings banks and cooperatives) closed June below the 3.39% of the previous month and the 3.80% of a year earlier.

The NPL ratio of financial credit institutions fell to 6.33% in the sixth month of the year, down from 6.58% in May and below the 6.22% of a year earlier.

According to data from the Bank of Spain, the provisions of all credit institutions fell to €30.529 million in June, down 1.10% compared with the previous month and down 8.48% compared with June 2022.

Original Story: Idealista |Redacción 
Photo:  Banco de España
Edition and translation: Prime Yield