Bank delinquency touches 14-year lows in full rate hike by the ECB


Companies, households and entities are enduring the shock caused by the rise in official rates that the European Central Bank (ECB) has been applying since last July, after more than a decade of lethargy in monetary policy, in which the price of money remained at record lows. Non-performing loans granted by all credit institutions to companies and families fell slightly in September compared to the previous month, up to 3.79%, which is its lowest level since December 2008in the middle of the financial crisis.

The provisional data made public this Friday by the Bank of Spain (BdE) confirm a reduction in the default rate of 56 basis points compared to the same month a year ago (in September 2021 it stood at 4.43%) and they occur at a time when households and companies have to face a sharp rise in the cost of living with inflation at very high levels. Despite having moderated notably in relation to the peak registered in July, the annual rate of inflation was still at 7.3% in October.

The figures published by the regulator also reveal that the provisions of all credit institutions fell to 32,738 million euros in the ninth month of the year, which implies a loss of 6,224 million euros in the last year. The total volume of doubtful credits was 46,325 million euros in September, 1.93% lower than the previous month and 12.30% below the levels of September last year.

The fact that the total volume of credit granted to the private sector was slightly reduced with respect to August it also served to smooth the delinquency rate. The loans added 1,223 billion euros (amount that is 1,596 million less than in August, but 9,972 million more than a year earlier). It must be taken into account that these figures leave out Financial Credit Institutions (EFC), which since January 2014 were no longer included in the category of credit institutions due to a methodological change.

If the data broken down by type of entity are taken, the rate was higher in the case of financial credit establishments: where it reached 6.29% compared to 6.51 the previous year and 6.30% the previous month. The doubtful ratio of the deposit institutions as a whole (banks, savings banks and cooperatives) closed the ninth month of the year practically in half, at 3.70%, being lower than the 3.77% August and September a year ago (4.29%).


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