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NPL Ratio Falls For Third Consecutive Month To Reach 12.77%

19 January 2015 – Expansión

The NPL ratio of Spanish banks decreased by 17 basis points in November, to reach 12.77%, its lowest level since September 2013.

The default rate declines in November, for the third consecutive month. The NPL ratio of banks, cajas, credit cooperatives and other financial entities dropped by 17 basis points to reach its lowest level since September 2013. The default rate of the sector as a whole, including companies such as the ICO (Official Credit Institute), amounted to 12.75%.

Doubtful assets decreased during the month by €2,115 million to reach €175,192 million, representing a reduction of 8.2% with respect to November 2013.

There was also good news on the credit side, which recorded a month-on-month rise of €6,014 million, although it was still down by 5.6% year-on-year. We have not seen a lower rate of decline since August 2012, which indicates that the “closed credit tap” is gradually starting to open.

The default rate in the banking sector peaked in December 2013, when it reached 13.689%. Last October, it fell below 13% for the first time since then. Experts and banks predict that the downward trend will intensify this year, although they point out that, whilst credit balances continue to fall, the reduction in doubtful assets will be transferred more slowly to the NPL ratio.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake