The claims of the supervisors (Bank of Spain and ECB) to the financial sector have been of no use to continue increasing the level of provisions in the face of alerts of a possible rise in non-performing loans and an increase in impairment of assets due to the uncertainty of the health crisis. The entities of our country have begun to drastically reduce their mattress after the efforts made last year, when they made extraordinary allocations to face the pandemic.
In the second quarter of the year, after twelve months of increasing coverage, the bank for bad debts and losses on other assets (including real estate) of the national system has decreased by 3,885 million, which represents a decrease of 3.6% , as consequence of the release of provisions in some cases and the greater use of them as a consequence of the total recognition of losses.
In fact, one of the keys to the improvement in the banks’ first semester profits is due to a significant decrease in endowments carried out with respect to the same period of 2020. In most cases they have fallen by more than 50%.
According to data published by the Bank of Spain, entities accumulated 102,888 million for losses in June , compared to 106,733 million in March. The amount, even so, is still much higher than in February of last year, the month before the outbreak of the coronavirus. At the time, these reserves stood at 93,600 million, so they still have almost 10,000 million more to assume the deteriorations that materialize in the future due to their business in our country.
Of the total, 39,668 million are saved for loans . Money that in three months has decreased by just over 1,400 million, that is, 3.4%.
The bankers, contrary to the criteria of the supervisors, consider that their level of endowments is adequate and that a higher cushion is not needed, taking into account the evolution of the economy and future forecasts, which are being better than initially Estimate. In fact, some banks, such as Santander , have already begun to release part of the special provisions for the pandemic in some markets – the United Kingdom and the United States – and do not rule out doing so in the next few quarters in the Spanish subsidiary.
For the moment, non-performing loans remain under control despite the uncertainty, thanks to the support measures promoted by the Government, although experts, regulators and the financial sector itself expect an upward slope to begin in the summer.
The rate of non-performing loans has fallen to 4.40%, compared to 4.51% in March and 4.82 in early 2020. The volume of non-performing loans stood at 54,218 million in June, close to 800 million less than at the end of the first quarter and 2,800 million less than in February of last year.
Analysts suggest that the escalation of insolvencies will reach its peak in 2022 and that the ratio will rise to 7-8% , a much lower percentage than initially calculated, when they anticipated that it would exceed double digits. The greatest concern is installed in consumer financing, which has been rising in recent months , and in sealed operations with SMEs and the self-employed.