2023-12-13 07:08:38
Banks will notice the slowdown in credit in 2023 and will begin the recovery in 2024. This is one of the main conclusions of the EY Bank Lending Economic Forecast report, which predicts a 2.1% drop in total credit to companies and families in Spain at the end of this year that will begin to compensate during the coming year until achieving a step forward of 0.6%. Credit will continue to rise during 2025, a year for which they estimate an increase of 1.6% that will be rounded off the following year, when a new improvement of 2.6% is planned. These figures come at a time when analysts foresee the first interest rate cuts before the summer of next year and some are already discounting up to five downward movements during the next year.
The pronounced decline with which this year will close is attributed, according to EY experts, to the slowdown in the real estate market, the increase in borrowing costs and consumer caution. Thus, in a context of high interest rates – and despite the steps backwards that the Euribor has been taking in recent weeks – the report highlights that financing conditions continue to tighten, impacting both the demand and availability of mortgages, mainly factor to take into account.
Banking forecasts 2023
Thus, the deterioration in the granting of mortgage loans suffered a drop of 3.3% year-on-year in the third quarter, continuing a downward trend since the fourth quarter of 2022. On the other hand, EY expects that the last quarter of the year will try save the furniture and for all of 2023, the expected fall in the mortgage market is 1.5%. This is due, in part, to the structure of Spanish mortgages, which are more exposed to increases in interest rates than in other key economies of the eurozone since, approximately, 75% of the outstanding mortgage debt in Spain is at interest rates. variable, they point out. Thus, by 2024, the recovery of the mortgage market will begin, with an increase of 0.9% to 489,000 million and 1.4% in 2025.
If we continue to break it down by type of loan, companies are the ones that are left furthest behind in the recovery, but to make the comparison it is necessary to take into account the journey of the last few years of this segment, where the Covid ICOs watered all types of liquidity companies. Thus, during 2023 the decline in loans to companies was 3.4% year-on-year, closing the year with around 545,000 million euros, a figure that will remain stable during 2024. Financing to companies will recover in 2025, with a growth of 1% over the previous year, up to 550,000 million and will rebound significantly in 2026, when it is expected to grow by 3.7%. And, as interest rates decrease, a recovery is forecast with 1% growth by 2025, also supported by the deployment of European Next Generation funds starting next year.
In the area of consumer credit, for its part, EY sees signs of slowdown, with a modest growth of 0.4% projected for 2023, compared to the robust increase of 3.1% recorded in 2022.
Delinquency rebounds
The rapid rise in interest rates that has occurred in the last year and a half and that has for the moment tiptoed around the delinquency indicators, will be noticeable during 2024. Thus, the non-performing loans that will close this year in 2 .7% – one tenth less than last year, it will rebound to 3.8% next year to moderate during the next two. Be that as it may, this increase in defaults will be slight, as it will cause the indicator to remain below the pre-Covid figures.
Pedro Pérez Iruela, partner responsible for FSO at EY Spain, points out in this regard that “despite the geopolitical tensions and their impact on the economy, higher interest rates are making it easier for financial entities to continue showing solid behavior. The slowdown of bank credit and the rise in bad debts should not be a cause of great concern, since they are going to remain well below the levels after the financial crisis. In addition, a gradual recovery is expected starting next year, collaborating a general improvement in the economic situation”.
#bank #foresees #rebound #credit #lowering #rates