The provisional data from the Bank of Spain shows that total credits to both institutions and private entities stood at 4.19 percent in April, down from 4.24 percent in March and well below the 4.53 percent recorded in April 2021. This figure reflects a continuing easing in the overall non-performing balance as banks and borrowers adjust to changing credit conditions.
As a result, the bad debt ratio kept retreating in April and reached a level not seen since January 2009, when the ratio stood at 3.89 percent. The trend signals improved asset quality amid ongoing sector adjustments and the gradual normalization of loan portfolios.
In April, loans extended to the sector rose by 0.65 percent versus March, hitting a total of EUR 1,221 billion. At the same time, the total amount of doubtful loans declined by 0.55 percent to EUR 51,201 million. Compared with April 2021, total credit increased by 0.61 percent, while the doubtful balance showed a more pronounced decrease of 6.89 percent, highlighting a strengthening in credit risk management and stronger loan performance compared with the prior year.
The figures incorporate a methodological adjustment related to the classification of Financial Credit Institutions (EFC), which has not been counted as credit institutions since January 2014. Excluding this adjustment, the default rate would remain at 4.30 percent, with the loan balance standing at EUR 1,190 billion in April when EFC loans are excluded, underscoring the impact of classification changes on headline metrics.
Disaggregated by institution type, the share of doubtful assets across all depository institutions (banks, savings banks, and cooperatives) closed April at 4.09 percent, down from 4.15 percent in March and well below the 4.46 percent a year earlier, indicating ongoing improvement in asset quality across the sector.
Meanwhile, the default rate for financial credit institutions held at 7.12 percent in April, matching March and remaining higher than the 6.82 percent recorded in April 2021, which reflects the specific risk profile of these entities amid market and funding dynamics.
drop off supplies
Credit provisions for institutions reached 35,319 million euros at the end of April 2022. This marks a slight month-on-month decrease of 0.12 percent and a cumulative reduction of 14.36 percent from the previous year, illustrating a steady pullback in reserves as lenders adjust to improved credit quality and forward-looking risk assessments.
Provisions set aside by deposit-taking institutions amounted to 32,886 million euros in April, which is 0.20 percent lower than March and about 14.90 percent lower than the same month last year, reinforcing the narrative of loosening risk buffers alongside improving portfolio outcomes.