Bad loans increased again in February, both between companies and between families. In total, the bank has more than € 9.5 billion in uncollectible.

Preliminary data from the Bank of Portugal shows that the bad debt among families increased to 2.96% of total loans granted. A development that was shared by all financing destinations: housing loans, consumption and other purposes (including loans where for education and self-employed).

In total, the amount of bad debt corresponding to households amounted to 4.19 billion euros in February. Already in the business bad debt increased to 5.31 billion, corresponding to 4.66% of total loans granted by banks. The bad debt continues to increase as well in an adverse economic environment, where the unemployment rate remains above 11%.

The forecasts are not encouraging, with the outlook pointing to new economic recession in Portugal, which will impact on businesses and families. And this at a time when interest rates are starting to rise. The European Central Bank (ECB) raised the price of money for the Eurozone last week to 1.25%, and economists predict that the interest rise at least twice more. This means that the ECB should put the interest at 1.75% at the end of this year.

And this development is reflected by the Euribor rates, which are the indices commonly used in credit agreements for housing in Portugal. On the sidelines of these developments, the bank has increased the “spreads” practicing in household financing and business due to the economic times and increased risk of default, which in the current context makes it even more difficult situation.

[Fonte]