Spanish Lenders’ Bad Loans Ratio Reached Record 11.61% in June

Bad loans as a proportion of total lending in Spain rose to a record in June as the country’s weak economy spurred a jump in missed payments.

Bad loans accounted for 11.61 percent of lending in Spain in June compared with 11.21 percent in May and 9.65 percent in the same month a year earlier, the Bank of Spain in Madrid said on its website today. The stock of “doubtful” loans in the economy rose to 176.4 billion euros ($235.1 billion) as 6.21 billion euros of credit soured during June, the regulator said.

A Spanish economic slump now in its sixth year continues to drive up non-payment of loans by companies and consumers, hurting profits at lenders as they set aside provisions to cover losses. Banco Santander SA (SAN), the nation’s biggest bank, said last month its bad loans ratio climbed to 5.18 percent from 4.76 percent in March as the bank booked 2 billion euros of loans as doubtful to comply with new Bank of Spain criteria for classifying 208 billion euros of loans that have been refinanced or restructured.

Lending in the Spanish economy fell to 1.52 trillion euros from 1.74 trillion euros a year earlier, the Bank of Spain said.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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