2 August 2016 – Expansión
First increase since 2010 / The appeal of consumer loans and lower mortgage repayments is leading to a change in the decreasing loan balance trend. However, business financing decreased due to the political uncertainty.
(…) The latest figures from the Bank of Spain and the financial institutions show that the trend in terms of credit is changing, which could make 2016 the year of recovery in the credit sector.
In this sense, loans to families across the sector grew by 1.04% in June and recorded a half year increase, of 0.02%, for the first time since the start of the crisis. In addition, eight of the eleven Spanish entities that have now presented their results, reported increases in gross loans to clients during the first six months of the year.
These figures show that for the first time, the volume of new loans granted by the entities exceed the volume of repayments, thanks to the liquidity measures led by the European Central Bank (ECB) and the need for entities to grow volumes to offset their decreasing margins.
The last time that Spanish financial entities increased their total loan balance to families was during the first half of 2010, when the international financial crisis had not yet reached the Spanish sector.
In this way, families then held financial debt with Spanish banks amounting to €724,100 million, i.e. €117 million higher than the €723,993 million balance at the end of 2015.
Boost from consumption
This rise comes mainly due a boost from consumer credit in recent months, thanks to the economic recovery and the gradual reduction in unemployment. In this way, the outstanding consumer loan balance increased from €162,000 million at the end of 2015 to €171,00 million at the end of June 2016.
This €9,000 million growth offset the incessant deleveraging of households away from mortgages, which have decreased from more than €549,000 million in December last year to almost €541,000 million at the end of the first half of this year. In other words, a difference of €8,000 million, below the growth in consumption.
These figures reflect a deceleration in the decrease of the outstanding mortgage balance, which has been falling at a rate of more than €25,000 million in recent years. In 2016, repayments have slowed and the granting of new mortgages has increased, as reflected by the new credit data.
The change in the trend of loans to households has not affected financing for companies. That decreased by 1.6% during the first 6 months of the year – from €918,199 million to €903,378 million – due to the opening of other alternatives such as MARG and the issue of bonds, and the deceleration in demand caused by the political uncertainty. That was one of the main concerns expressed by Spanish bankers during the presentations of their half year results. (…).
(…)The increase in Bankinter’s loan balance (13.7%) was noteworthy, although that figure was impacted by the acquisition of Barclays Portugal, given that the entity does not segregate those numbers. It was followed by Abanca,which reported that its financing balance grew by 4.1%; CaixaBank, with a rise of 1%; and Santander España, with an increase of 0.8%. (…).
Original story: Expansión (by J. Zuloaga)
Translation: Carmel Drake