• Finance: Families cease to return 57 million in consumer credit each month

Consumer credit has been one of the pillars of banking in the last year, in the search for profitability in a scenario of minimum and negative rates. Its growth has taken place at such a speed that supervisors and regulators have already warned entities about the rise in delinquency and the situation could go further. That is at least what Moody's indicates in an analysis published this Monday, in which it ensures that the slowdown of the Spanish economy and the loss of consumer confidence can raise borrowers' risks to face their loans and generate problems in the consumer credit industry.

"We expect borrowers to face more challenges to pay off their consumer loans due to a gradual moderation in the growth performance of the Spanish economy," said Antonio Tena, vice president and senior analyst at the rating agency.

Banks have accelerated the granting of these types of loans to counteract the effects of the ECB's monetary policy, which weights their accounts in recent years. Compared to the 2% charged by entities for loans for new mortgages, loans destined for consumption exceed an average of 7% interest rate, in exchange for a greater risk in the client profile.

Consumers, meanwhile, have raised their demand for such products encouraged by the recovery after the financial crisis of 2008. However, the signs of slowdown that have become visible in recent months have undermined part of their confidence in the Spanish economy and in employment and that, according to Moody's, anticipates a weaker behavior of consumer credit.

" The drop in consumer confidence somewhat correlates with a weaker future performance in consumer credit," he says. He also adds that "the sharp decline in consumer confidence during the second half of 2019 reflects the growing concerns of Spaniards about the economy and employment"; that deterioration, he points out, is consistent with other recently published negative data and "is negative for asset securitizations (ABS) that have consumer loans as collateral."

According to data from the CIS ( Center for Sociological Research ) collected by Europa Press, the Spanish consumer confidence index had plunged to 77.7 points in December 2019, 13 points below the previous year's reading, its highest level Low since 2013.

However, the agency clarifies that the effects will not be the same for all types of consumer loans, since those intended for the purchase of cars will have a better performance, "due to the higher quality of their borrowers", while the loans to consumption without a specific purpose they are often used by debtors in difficulty, so they will be the most affected.

Moody's estimates that the Spanish economy will grow 1.8% in 2020, compared to the 3% average that advanced between 2016 and 2017. In a recent comment following the formation of the coalition government led by Pedro Sánchez and Pablo Iglesias, the Vatican firm that the new Executive will maintain a continuous line with the policies of the previous legislature, although he has warned of the credit risks of reversing reforms such as labor.

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