Defaults as a proportion of total loans in Spain jumped to a record in November as a weak economy forced borrowers to miss payments.
Non-performing loans accounted for 13.1 percent of lending compared with 13 percent in October and 11.4 percent a year ago, the Bank of Spain said on its website today. The stock of bad loans climbed to 192.5 billion euros ($261.8 billion) during the month as 1.5 billion euros of loans turned sour. Overall lending rose for the first time in eight months.
Spanish banks including Banco Popular Espanol SA (POP) have led the country’s stock rally this year as some investors anticipate the increase in bad loans may end as the economy recovers. With unemployment still at 26 percent, it’s unlikely that the bad loans ratio will peak before the end of this year, said Fernando Pascual, an analyst at Espirito Santo Investment Bank in Madrid.
“There is still work to do in provisioning,” Pascual said in a phone interview.
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