Spanish banks listed on the Ibex 35 can boast of the quality of their credit. Despite the rise in the Euribor, which began to be noticed at the beginning of February of last year, and the economic slowdown as a result of the increase in inflation, banks did not notice a greater increase in delinquency. What’s more, the main banking groups managed to reduce by 3%, just over 7,000 million euros, the volume of credits at risk of non-payment, according to what is included in the annual accounts presented by the entities at the beginning of the year.
Thus, 2022 closed with 227,212 million euros in doubtful loans compared to 234,248 million euros a year earlier. And in the last quarter, in which precisely the rise in the Euribor began to increase the cost of paying mortgage payments, while the Spanish economy stagnated (it barely varied 0.2% compared to the third), qualified loans as such it was reduced by 2,547 million euros.
However, there are differences depending on the entity. Both Banco Santander and BBVA significantly lowered loans classified as ‘stage 2’ as well as ‘stage 3’, classified as doubtful. The entity chaired by Ana Botín has closed the year with a total of 103,820 million euros of this type of credit, showing the correction that began at the beginning of last year and despite the fact that “the world economy continued to present an inflationary scenario driven by the The increase in the prices of raw materials, the disruptions in the supply chains and the outbreaks of covid-19 in China ”, explains the entity in the financial report for 2022.
However, from the bank they also point out that creditors continue to meet their financial obligations, despite showing potential deterioration because “economic activity is showing more resilience than expected.” Sources from the sector explain that this drop in problematic assets merely reflects the good behavior that the delinquency rate had in 2022. As for the second Spanish bank, BBVA reduced problematic assets by almost 1,800 million compared to the period which covers from July to September 2022 corresponds to Spain.
Unicaja Banco is another of the entities that has seen the final photo of this type of credit improve by also decreasing throughout 2022 for both categories. Specifically, these loans have fallen by 4.3% for stage 2 and 1.3% for those classified as stage 3. However, in the last quarter of the year, these barely fell by 0.3%, which that you can already anticipate a certain deterioration for the year, especially for the closest entities exposed to mortgage and business credit.
Caixabank, Banco Sabadell and Bankinter, lights and shadows
Caixabank reduced almost 6,000 million euros in this type of loan during 2022, however, in the fourth quarter of the year it experienced a stagnation compared to the previous one, since the reduction was only 3 million euros. In this way, the entity closed the year with a total volume of 41,306 million euros, after the volume of loans placed under special surveillance threatened almost 1,000 million in the last quarter of the year, which may anticipate a change in the cycle. . For its part, Banco Sabadell has also had a similar behavior. Loans under special surveillance have convinced, even for the year as a whole, going from 12,918 million euros to 14,337 million euros, on the other hand, doubtful loans, stage 3, have been reduced.
The reason is that the business of these entities is more domestic: they can benefit from the rise in the Euribor and the appreciation in the portfolios, but it can also put more pressure on payments. Other aspects that influence Banco Sabadell, and that could be negative in the face of a slowdown in the economy, is its strong exposure to SMEs. Already the CEO of Caixabank, Gonzalo Gortázar, said that for this year it is expected that delinquency will increase. And it comes to confirm what was stated by the European Central Bank (ECB). The European organization has established entities to be prudent when making provisions this year due to the deterioration caused by the rise in interest rates.
Bankinter has seen how the volume of loans classified as special surveillance has increased by 35% in the last year, with 79 million euros more in the last quarter. Although it must also be taken into account that the credit volume of the entity directed by María Dolores Dancausa is different from that of larger banks.
Coverage rates and default risk
Looking ahead to 2023, sources in the sector will point out that the key will be the evolution of unemployment. But if there is a significant deterioration, part of the volume of credits that are now within ‘stage 2’ could become doubtful and this would cause an increase in provisions, as the market expects, after the Spanish banks had reduced them. during the past year, with the exception of Banco Santander and BBVA, due to their exposure to emerging markets. Also because delinquency is still anchored at minimum levels.
Regarding the coverage of doubtful loans, BBVA and Caixabank present the highest, with 81% and 73% respectively, while those of Unicaja Banco and Bankinter comfortably exceed 50% (68% and 66, 4%) On the other hand, Banco Santander remains below 50%.