Spain’s financial system is showing impressive signs of recovery, steadily shaking off the legacy of past crises. The country’s banking sector non-performing loan rate has dropped to levels unseen since September 2008, effectively returning to pre-crisis figures. According to the latest data, the share of problematic loans in September stood at just 2.87%, marking the lowest level in the past 17 years. This not only demonstrates a significant strengthening of financial discipline, but also points to growing stability among lending institutions and improved borrower solvency.
The decline in overdue debts is occurring alongside overall credit growth, offering a double boost for Spain’s economy. In absolute terms, the volume of doubtful loans fell to 34.697 billion euros—682 million less than in August, and nearly 5.8 billion less compared to the same period in 2024. This confirms a steady trend toward improved asset quality. At the same time, the total loan portfolio rose, reaching 1.21 trillion euros. An increase of 31 billion over the year highlights a revival in lending activity for both individuals and businesses in the country.
When considering various types of lending institutions, the main improvements came from traditional banks, savings banks, and cooperatives. In this segment, the share of overdue loans dropped to 2.78%, six basis points better than in August. Their portfolio of non-performing loans decreased by 608 million euros over the month, reaching 32.207 billion. Over the year, the reduction was even more significant—about 5.2 billion euros—indicating a systemic effort to clean up their balance sheets.
Specialized financial institutions, which often work with riskier segments, also contributed to the overall positive trend. Their overdue debt ratio fell to 5.31% from 5.65% a month earlier, marking a notable improvement. By the end of September, their portfolio of questionable loans totaled 2.311 billion euros, which is 72 million less than in August and 550 million less year over year.
An interesting trend is also seen in the area of banking reserves. Regarding provisions set aside to cover potential losses, their total across credit institutions reached 27.445 billion euros. This figure rose slightly by 72 million over the month, but on a yearly basis, reserves fell by 1.795 billion euros. This trend may indicate growing confidence among banks in the quality of their assets and the solvency of their clients, allowing them to release some previously reserved funds.
For reference, the Bank of Spain, which provides these statistical figures, is the country’s central bank and a member of the European System of Central Banks. It was established in 1782 by King Charles III and was originally called Banco Nacional de San Carlos. Today, its main functions include overseeing the payment system, supervising banks as part of the EU’s Single Supervisory Mechanism, and issuing euro banknotes and minting coins. Additionally, the bank acts as the government’s financial agent and manages the state’s debt obligations. The bank’s headquarters is located in Madrid in a historic building on Plaza de Cibeles.
