MADRID: The Bank of Spain warned on Tuesday that lenders’ income growth was likely to slow down this year amid lower interest rates and geopolitical risks, and it would need to closely monitor the credit quality of bank loans.
In its semiannual financial stability report, the central bank said the credit quality was now at favourable levels, but it could deteriorate if a potential economic slowdown weighs on borrowers.
The ratio of bad loans has been stable in Spain a little above 3% in late 2024 and early 2025, far below the all time-high of 13.6% in December 2013.
Banks’ net interest income has fallen 3.9% in the first quarter, the central bank said, after rising 22% in 2023 and 8.8% in 2024.
It also said the much-delayed implementation of the Basel III international capital rules remained a priority as it would prevent accumulation of global systemic risks. The rules should be consistent with the planned revision of the European Union’s supervisory framework, it said, to make the framework simpler without undermining the banks’ resilience.
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