Spain Bad Loans Ratio Dips From Record as Growth Resumes

Bad loans as proportion of total loans at Spanish lenders fell in February from a record high in January as the resumption of economic growth started to help banks improve their asset quality.

Non-performing loans accounted for 13.7 percent of lending in February compared with 13.8 percent in January and 10.4 percent a year earlier on a like-for-like basis, the Bank of Spain said today on its website. The stock of bad loans fell for a second month, dropping to 195.1 billion euros ($270 billion) from 197.2 billion euros in January, the regulator said.

Banco Bilbao Vizcaya Argentaria SA and Banco Popular Espanol SA (POP) are among Spanish lenders that have said they detected improving loan quality trends in the first quarter. Spain’s economy will grow 1.5 percent this year and next after it shrank 1.2 percent in 2013, Economy Minister Luis de Guindos said in a radio interview on April 11 with state broadcaster RNE.

Popular’s Chairman Angel Ron said in a March 21 interview in Madrid that he had detected a “radical change” in loan default trends. His analysis was at odds with the assessment of Standard & Poor’s, which downgraded the lender’s debt rating in February on concern that credit quality remained weak.

Lending to Spanish residents calculated on a like-for-like basis excluding credit establishment loans, dropped 0.2 percent in February from January and 8.3 percent from the same month a year earlier, the Bank of Spain said today.

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

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net Todd White, Stephen Kirkland

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