Spain | 2022, year of banking transition

In the Spanish banking system, 2022 will go down in history because several events will occur (or are already unfolding) whose impact on the industry’s results are hard to gauge. Two such events are the war in Ukraine and the end of the grace period for ICO-guaranteed loans.

Key points

• Key points:
• This year, the European Central Bank (ECB) is considering raising its official policy rates for the first time since October 2008 (albeit with a brief hiatus between April and July 2011).
• This will push up the Euribor (in fact this is already happening, with the rate now in positive territory) and the interest rates of all euro-denominated financial assets.
• In the specific case of the Spanish banking system, this will generate opposing effects. Whereas a rising Euribor is expected to increase bank revenues, it could also trigger a slight increase in non-performing loans and loan-loss provisions.
• However, the financial burden on households and businesses has fallen over the last few years and the level of indebtedness has also dropped significantly.
• Most companies also find themselves in good financial health in the wake of the pandemic, and the expected economic growth, although less strong than initially estimated, will be enough to meet the repayments on these loans.

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