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The Banks’ Average Default Ratio Drops To 10.66% In Sept

19 November 2015 – Expansión

Improving trend / The banks’ average default ratio dropped to 10.66% in September, its lowest level since 2013. Bankinter has the lowest default rate (4.35%).

The default rate of Spain’s banks continues to fall, mainly thanks to a decrease in the number of loans going into default, an increase in recoveries and sales of non-performing portfolios.

The latest statistics, as at September, show that the default ratio amounted to 10.66%, its lowest level since March 2013. Moreover, there was a small month-on-month recovery in total lending, which boosted the trend.

The decrease is the result of two factors, which are pushing in the same direction: a decrease in doubtful debts and a slight recovery in overall lending. Doubtful loans decreased by just over €3,000 million in September, to amount to €141,267 million. This represents a YoY decrease of 21%. In parallel, loans granted by banks, savings banks and other financial entities increased by €7,529 million during the month, to €1.325 billion, which led to an almost 1 basis point reduction in the YoY rate of decline, to 3.29%.

This trend is a reflection of what is happening in the vast majority of entities. But, clearly, the situation is different for each bank.

Based on the data as at September for the country’s main financial institutions, eight had a default ratio below the average rate and four had a default ratio that exceeded it.

Bankinter stands out as the bank with the lowest default ratio in Spain, with a difference of 6.3 percentage points compared with the average for the sector (10.66%).

Thanks to its prudent strategy in the real estate sector during the boom years, the entity led by María Dolores Dancausa maintained its position as the bank with the lowest default ratio for the entire duration of the crisis.

CaixaBank is ranked in second place, although it sits a long way behind Bankinter. The Catalan bank had a default ratio of 8.7% in September, having reduced its ratio by almost 2 points in the last year. It is followed by Kutxabank, another entity that has been noted for its robustness, during a period when the vast majority of the savings banks suffered from the ravages of the burst of the RE bubble.

Spain’s two largest banks, Santander and BBVA, have exactly the same default ratio: 9.5%, based on the data supplied by the entities to Expansión. (…). Therefore, both banks have a default rate that is one percentage point below the average ratio for the sector.

Ibercaja Banco, the former Aragonese savings bank, which took control of the Caja3 group, also sits slightly above the average. Finally, Sabadell and Liberbank’s ratios are also above average, although in both cases, the ratios do not include the assets covered by their respective Asset Protection Schemes, granted when they acquired CAM and CCM, respectively.

Original story: Expansión (by Michela Romani)

Translation: Carmel Drake