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Western EuropeNovember 5 2020

Spanish banks 'face asset quality slump’ in 2021

Government support has mitigated credit risks this year but impact of Covid-19 second wave likely to ramp up pressure on lenders, says DBRS Morningstar.
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Spanish banks 'face asset quality slump’ in 2021

Leading Spanish banks reported a slight recovery in third quarter domestic earnings compared to the second quarter as net fees and interest income rose, boosted by larger loan and fixed income books.

However, new restrictions that have been imposed in Spain to fight the second wave of Covid-19 are likely to increase loan loss provisions in the next few quarters putting pressure on Spanish lenders’ domestic profitability, according to DBRS Morningstar.

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