Credit in Spain is contracting at an unprecedented rate, down 33% in the first quarter as Spain faces a housing bust and near 20% unemployment. Below is my translation of part of a Spanish-language article explaining the situation.
Consumer credit fell by 33.7% in the first quarter, to €5.796 billion, and late payments rose to 17.54%, according to the National Association of Financial Institutions Credit (Asnef).
Of this total, 4.254 billion euros corresponded to consumer goods, which fell by 23.9% and 1542.3 million euros to the automotive sector, which fell by 51%.
Asnef stressed that the fall in the consumer sector has been mainly due to losses on personal loans, due to the sharp decline in the credit available for consumer goods and by the contraction of revolving credit associated with credit card usage.
Specifically, consumer goods fell by 30% to 882.9 million, revolving credit card loans by 14.5% to 3.142 billion, and personal loans by 65% to 227.9 million euros.
With regard to late payments, the financial institutions put their rate at 8.03% and by activity, consumer credit stood at 17.54%, while in the automotive sector, it stood at 13.70%.
The total number of contracts signed during this first quarter was 1.64 million, representing a 27.6% lower over the same period last year, of which 1.5 million were for consumers, at an average 2,720 euros, 5.7% less, and 119,822 automotive contracts, at an average of 12,870 euros, 45.7% less.
Clearly, these are disastrous numbers. This is one reason that ratings agencies have been downgrading Spanish banks. I expect more bank failures or bailouts in Spain in the coming months.