One out of every ten credits with moratoria already expired from Santander in Spain goes into default

This country is the entity’s market in which the most moratoria are pending expiration: 54% compared to the group average of 14%.

Delinquency still does not appear in the balance sheets of banks for another quarter. The support of the measures put in place by the Government and by the entities themselves delays the arrival of defaults that the financial system will have to face and, in the case of those that no longer have an effect, such as the moratoriums, delinquency remains contained.

It is the case of Santander. The entity has only registered defaults in 5% of the moratoria already expired of those it has granted throughout the group since the pandemic began, although in the case of its Spanish subsidiary the proportion rises to 10%.

In its home market, Santander granted 11,000 million euros in moratoriums, 6% of its total portfolio, and around half still has pending expiration, about 6,000 million. Spain is, in fact, the market in which a lower percentage of moratoria has expired granted by the bank, 46% of the total, compared to 86% on average.

José Antonio Álvarez Álvarez, Vice President and CEO of Banco Santander.

José Antonio Álvarez Álvarez, Vice President and CEO of Banco Santander.
Jesus Umbria

In any case, not all of them will represent a problem for the bank. For the time being, 10% of those already due in Spain have defaulted, a percentage similar to those of U.S (11 and Brazil (9%), but well above the average for Europe (4%) and, more specifically, of its consumer credit subsidiary, Santander Consumer Finance (4%). However, the majority, 74%, is qualified as normal, that is, it does not present a risk of default.

A fact, in any case, in line with the rest of the sector. According to data made public on Wednesday by the Bank of Spain and collected in your Financial Stability Report, the vast majority of loans with overdue moratoria are classified as normal, while slightly less than 10% are as doubtful.

112,000 million in the entire group

At the group level, since the start of the pandemic, the bank has granted 112,000 million euros in moratoriums, which represent 12% of the bank’s loan portfolio. Of this total, those corresponding to 96,000 million have already expired and, of them, 5% have entered default.

As for those that remain, 16,000 million, “are being the subject of a close monitoring“, states the bank. In any case, of them, 7,000 million expire during the second quarter. The highest number of defaults occurs in the consumer credit segment (11%), while in SMEs and other companies (6%) and mortgages (3%) it is lower.

delinquency

What worries the sector the most when dealing with delinquency is the business segment, which has been granted a large volume of credit during the pandemic, partly with State guarantee. However, it is still difficult to predict the future of these debts and their impact on the financial system, especially considering that many will be restructured.

Precisely, during the presentation of results held on Wednesday, Jose Antonio Alvarez, CEO of Santander, acknowledged that there is still a “poor” visibility on what will be the evolution of non-performing loans in the coming months.

In any case, he stated that it will be “correlated with the intensity of the recovery.” “How much will it rise? will depend on the recovery and its sustainability over time, because there will be a clear rebound when the confinement disappears, ”he added.