Bad loans as a proportion of total lending fell to 5.49 percent in September from 5.62 percent in August, according to the Bank of Spain.
Total bad loans in the banking system dropped to 101.3 billion euros ($138 billion) from 102.6 billion euros the previous month, the regulator said today. The bad-loans ratio for September compared with 4.86 percent in the same month a year earlier.
Spain’s property crash and unemployment at 20.8 percent have pushed default rates for the banking system to their highest levels since 1996. While Banco Santander SA, Spain’s biggest bank, says defaults in Spain won’t peak until about the middle of next year, Banco Bilbao Vizcaya Argentaria SA, the second-biggest lender, has said its bad loans have topped out after it allocated provisions to cover anticipated losses at the end of last year.
The bad-loans ratio at commercial banks rose to 5.58 percent in September from 5.49 percent in August, the central bank said. The ratio for savings banks declined to 5.34 percent from 5.69 percent as total lending dropped to 851 billion euros from 869 billion euros.
Spanish lenders have “troubled exposure” to construction and real estate of 181 billion euros and the cost of cleaning up the industry’s books has so far been about 70 billion euros in the form of government bailout funds, asset writedowns and use of reserves, according to the Bank of Spain.
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