The indicators on credit risk are showing clear signs of improvement. The non-performing loans ratio for the whole of the banking system fell to 11.0% in June (vs 12.5% in December 2014), and marking the lowest level since April 2013.
Companies continue to register the worst bad loans rates (16.2%), with the property sector leading the pack (32.1%) while the mortgage segment remains the most defensive (5.2%).
For Bankinter analysts:
“the trend across all the areas of risk is positive, with accumulated declines for the year as a whole varying between -65 basis points in the mortgage segment and -25 basis points in corporates.”
The improvement in financing conditions, the increase in activity (GDP grew 3.1% in Q2’15) and companies’ deleveraging efforts are all reflected in an overall drop in doubtful loans in the main economic sectors of real estate, industry and services.
In this respect, it is worth highlighting the improvement in the real estate sector. Despite registering very high non-performing loan rates (32.1% in June), these are far off the highs reached in 2013 (38.0%), after recording a decline of -409 basis points for the whole of 2015 and -592 basis points in the last twelve months.
Bankinter analysts conclude that:
“all the banks’ profit and loss acccount will positively reflect the improvement in their credit risk. But we believe that it will be the more domestic-focused institutions which will benefit most from this situation. For example, Bankia, particularly active in wholesale portfolio sales, as well as Popular and Sabadell, due to their greater exposure to SME business.”
In fact, with the exception of Liberbank, these three banks’ stock market performance has been significantly better than that of the big Spanish banks and other European banks during this last month.”
*Image: Foter / Antonio Tajuelo