Spanish Banks’ NPLs Ratio: The Trick Of Statistics

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The Spanish banks’ non-performing loans (NPLs) ratio fell to 10.35% in November (10.56% in October), with total bad loans standing at 138.894 billion euros. This shows that Spain’s banking system is still in poor health. But this simple figure encapsulates the eternal problems of statistics, with its mode, its median, its arithmetic average and its average deviation or variance.

The fact is that the average NPL figure provided by the Bank of Spain does not reflect the significant differences between the banks. In particular, Popular, BMN, Bankia and Unicaja have a higher level of bad loans and are speeding up the process of selling of debt portfolios. Then there is Bankinter, with an NPL ratio of 4.1%, mainly because it has not had excessive exposure to the property sector.

In any event, the enormous damage inflicted on Spain’s banks by the downturn in property sector is much less now than at the start of the crisis in January 2008, when bad loans totalled 180.385 billion euros.

As always happens when the Spanish banks’ NPLs data is released, a comparison is sought with the rest of the eurozone countries. And once again, it is demonstrated that this is not possible. The components of NPL data differ so much from country to country that it is impossible to have a common definition of what is, or what is not  considered as “bad loans”.

The situation we have witnessed in Italy in recent days can only happen within the context of “banking union.” The news that the ECB has requested more information from various Italian banks about their bad loans and real credit risk has fuelled a sharp drop in banking stocks. And this caused the Italian bourse to lose 4.83% in one session.


About the Author

Carlos Díaz Guell
Editor at and, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.