The bad debt ratio of Spains’s banking sector rose for the seventh consecutive month in October and hit a fresh 16-year high, data released Monday by the Bank of Spain showed.
According to the data, 7.42% of loans held by banks were more than three months overdue for repayment in October, up from 7.16% in September. That is the highest percentage since November 1994, and contrasts with bad debt levels below 1% of all loans in the years prior to the country’s 2008 property bust.
Overall, EUR131.9 billion in loans–the equivalent of around 13% of Spains’s gross domestic product–were non-performing in October, a record high, and well above the EUR128.1 billion recorded in September.
As of October, Spains’s banks had total of EUR1.78 trillion in loans outstanding, down from EUR1.79 trillion in September, a number that has changed little since 2008.
Lenders have been struggling to cope with steep losses on loans extended to the real-estate and construction sector, as the country tackles the deepest economic downturn in decades and an escalating debt crisis in the euro zone.
EasyForexNews Research Team