“We think 2010 will still be a year of high provisions because of the expected trend in bad debts, but 2008 and 2009 have been the most important years in terms of provisions,” Josep Oliu said after the bank announced better than expected 2009 results yesterday.
The rate for bad loans is expected to peak at around five per cent of the bank’s total loan portfolio, up from 3.73 per cent at the end of December, lower than the level at many of its Spanish peers. Sabadell set aside €837.7m (£725.3m) in provisions last year, primarily against sliding property values, including writing down €184.3m against its 10.9 per cent stake in real estate firm Metrovacesa. Spain’s property sector is in a steep downturn after a decade-long boom and many of the country’s banks have taken stakes in real estate companies in exchange for cancelling debt.
On Wednesday BBVA, Spain’s second-largest bank, raised broader doubts about the ability of Spanish banks to absorb the impact of the property market crash after it said it had set aside €6.6bn in provisions in 2009 for potential bad debts.