The problematic assets of Spanish banks represent 17% of the total, according to a report of the U.S. financial institution Citi, and will reach their peak in 2014, decreasing afterwards by 30% in 2016.
The document also points out that, although the default rate is the problem claiming more attention, there are other factors that are equally problematic, such as the foreclosures, the subprime loans and the refinancing.
The institution foresees that Spanish banks will get rid of these toxic assets in the next five years with discounts between 10% and 15%.
As for the default rate, for the six main financial institutions – Santander, BBVA, Caixabank, Popular, Sabadell and Bankinter – it forecasts that it will reach its highest level in 2015, although for all financial institutions it will continue growing for one more year, until 2017.
Although, according to Citi, there are segments where it is possible to see a deceleration or even a descent, specifically Bankinter´s mortgages.
The pace of deterioration, the report continues, started to slow down in 2012, while unemployment starts to grow at a slower pace and the growth of the GDP is also less negative.
The catalysts of results in the second quarter will depend on the numbers presented by the institutions in October, corresponding to the third quarter of the year, as well as the report from the Bank of Spain on the refinancing of loans, which will be known on the 30th September.
Citi increases the forecast for the Spanish banking sector, with Bankinter standing out due to the low level of its problematic assets, which enjoys a surplus of capital that will allow to reach a ROE of 10,5% on the medium term.