Lending in Spain plummeted after the 2008-2009 crisis, but consumers have regained confidence thanks to an economy that has grown at twice the average rate of the European Union this year, with expectations that it will outperform the bloc again in 2026.
“We still believe there is more room for healthy growth in the market given that recent labor market data is very strong,” said Javier Gaztelu, Deputy General Director and Head of Financing and Payment Methods at Sabadell.
The more than 10% (+12.6%) increase in the active population since the end of 2019, reaching 21.8 million in November, is allowing lenders such as Sabadell and Unicaja to benefit from more profitable consumer loans.
According to Gaztelu, the rise in saving capacity, especially since the pandemic, and the recent addition of half a million new workers over the past year have been key factors in the growth of consumer lending.
“A mortgage is a customer acquisition or retention product, while consumer credit is a tool to improve the profitability of the relationship with a client.”
Sabadell's consumer loan portfolio rose 19% year-on-year through September, outpacing a 5.6% increase in mortgage loans.
SPANISH POPULATION REACHES RECORD HIGH
Gaztelu noted that the increase in the workforce since late 2019 is driving lending, at a time when the influx of foreign workers is pushing Spain's population close to a record 50 million.
New consumer loans reached nearly 4.5 billion euros in October, a 21.8% year-on-year increase and the highest monthly total since 2007, according to official data.
This figure contrasts with the eurozone as a whole: a European Central Bank lending survey in October showed a moderate tightening of consumer credit due to concerns over economic prospects.
According to Nuria Álvarez, analyst at Renta 4, consumer credit will be a crucial driver of Spanish banking profitability in 2026, alongside corporate lending, asset management, and insurance.
DEFAULT RATES ON THE RISE
Unsecured consumer credit can be risky for banks.
Default rates on these loans rose slightly above 4% in October, nearly double the rate for mortgage defaults, but still far from the peak of 8.3% reached in June 2009.
Bankinter has reduced its exposure this year in some high-risk consumer portfolios, but Spain's fifth-largest bank is an exception.
The appeal for banks is clear.
The average yield on consumer loans was nearly three times higher than the 2.67% yield on mortgages in October, according to central bank data, as mortgage profitability has been hit by falling interest rates.
Elvira de la Cruz, from lender Unicaja, told Reuters she expects consumer lending “to continue growing in the coming years, perhaps not at the same intensity as in 2025, when records have been set in many indicators.”
The overall consumer loan portfolio of Spanish banks grew 7.2% year-on-year to 105.9 billion euros at the end of June, just below its all-time high reached in July 2008.
Consumer credit accounts for 8.7% of total loans, up from 8.3% last year and 5.8% before the crisis, according to a Reuters analysis.
Unicaja plans to double its new consumer loans by 2027.
“In the end, you target known clients with stable incomes and information that minimizes any possible defaults, as more than 50% of new consumer credit is channeled through pre-authorized loans,” said De la Cruz.
This executive added that communication with clients uses various channels such as remote banking, emails, or commercial management from the branch office.
In the case of BBVA, Spain's second-largest bank, its consumer loans and credit card business grew six times faster than its mortgage portfolio through September.
GOVERNMENT TO LIMIT HIGH-RISK LOAN RATES
Concerns about bank lending in general are limited, at a time when employment remains strong.
Even so, the Spanish government is increasingly worried about the growth of unregulated companies issuing loans with high interest rates that create significant problems for vulnerable borrowers.
In the coming weeks, the government will launch a process that will include setting interest rate limits on revolving credit lines, according to a government source, who added that these actions are part of a broader package of measures to implement an EU directive.
Such loans start with annual rates of 18% that can soar above 1,000%, creating an endless debt spiral due to the combination of very short repayment terms and fixed payments.
Rather than reflecting the strength of the Spanish economy, demand for these loans highlights the financial precariousness of many, with wages failing to keep up with the cost of living, says Antonio Gallardo, head of research at the Financial Users Association (ASUFIN).
“There are people who need financing for day-to-day living, who are excluded even from credit cards and turn to microloans. Microloans carry exorbitant interest rates, in the five digits or even more.”
(Reporting by Jesús Aguado; additional reporting by Jesús Calero; editing by Tommy Reggiori Wilkes and Alexander Smith; Spanish editing by Tomás Cobos)
