Unpaid Bills of Exchange March 2008

According to the National Statistics Institute (INE) the number of unpaid bills of exchange increased in Spain by 24.4% in April as compared with April 2007. 4.2% of the total value of expired bills remained unpaid In April, the number of returned unpaid bills of exchange reached 486,396, which was a 24.4% increase compared with the same month of the previous year. The value of these unpaid bills reached 1,504 million euros, a whopping 83.7% increase as compared with April 2007.

I think the chart below says it all. Get ready!





In a separate report, the Bank of Spain has that said non-performing loans at banks and savings banks rose a provisional 16.5 percent to 22.457 billion euros in April from a month earlier. Non-performing loans as a percentage of the total granted to individuals and companies reached 1.25 percent, compared to 1.12 percent in March. The increase in non-performing loans is the result not only of soaring debt levels in the property sector but has also been fuelled by companies going into liquidation, particularly in real estate and construction.

Growth in Spanish bank loans will slow to a level "in line with nominal GDP growth," compared with rates of over 20 percent in the past years, the head of the Spanish Banking Association Martin Fernandez said this week. He suggested bank credit would grow in line with nominal GDP growth. Nominal economic growth (that is without allowing for inflation) is expected by the Spainsh government to run at about 5.5 percent in 2008. If loans grow at the same rate this would represent a sharp slowdown from loan growth of about 10 percent forecast by banks when they announced first quarter results in April. Equally, if loan growth runs at only this level it is hard to see the sort of nominal GDP growth the government is forecasting, so we are in a kind of circle here.