The Bank of Spain issued a warning on Tuesday, cautioning that income growth for lenders could slow down this year due to lower interest rates and geopolitical risks. The central bank stated it would need to closely monitor the credit quality of bank loans as a result of these factors.
In its semiannual financial stability report, the central bank reported that the credit quality is currently at favorable levels. However, it also warned of a potential deterioration if an economic slowdown puts pressure on borrowers.
Data from late 2024 and early 2025 shows that the ratio of bad loans in Spain has remained stable, slightly above 3%. This is significantly lower than the all-time high of 13.6% recorded in December 2013.
The central bank also reported a 3.9% drop in banks’ net interest income in the first quarter. This follows a rise of 22% in 2023 and 8.8% in 2024.
In addition, the Bank of Spain emphasized the importance of implementing the Basel III international capital rules. Delayed for some time, these rules remain a priority to prevent the accumulation of global systemic risks. The central bank stressed that these rules should align with the planned revision of the European Union’s supervisory framework. The aim is to simplify the framework without compromising the resilience of the banks.
