Lower consumer confidence, combined with high interest rates and more restrictive lending criteria, has led to a slowdown in consumer credit demand across the euro area. In the latest Banks Credit Market Survey, monetary union financial institutions reported even higher losses to the regulator than expected for the third quarter (-12% versus the forecast -8%). Portugal was no exception, posting an annualized decline of 1.3% between January and September, which worsens to 4.3% if only the last three months of that period are considered, according to DN/Dinheiro Vivo calculations.
According to statistics from the Bank of Portugal (BdP), in the first nine months of 2023, the Portuguese requested approximately 5.72 billion euros in financing for consumption and other purposes, while the amount in the same period last year already exceeded 5.80 billion euros amounted to. billion. Excluding specifically the third quarter, the total amount granted by resident banks to households amounted to EUR 1.89 billion, a value representing an increase of almost 2% compared to the previous quarter, but still lower than the 1.98 billion calculated between July and September 2022.
In an analysis of credit activity from July to September, the Association of Specialized Credit Institutions (ASFAC) reports to the newspaper that personal loans at national level increased by about 3% compared to the second quarter, although they are up about 3% decreased. 12% compared to the same period last year, and that car financing saw a quarterly variation of practically 2% and an increase of 6% compared to the first nine months of 2022, with increases in credits and decreases in leasing and ALD [aluguer de longa duração]. Revolving, i.e. credit cards that offer a certain limit, saw a decline of just under 2% compared to the previous quarter and 4% compared to the same period last year.
“We are facing an expected and natural slowdown in the production of credit to consumers, caused by geopolitical and socio-economic conditions, which have not improved from September to then, meaning that these declines should continue and possibly from now on will increase.” says Duarte Gomes Pereira, Secretary General of ASFAC, stressing, however, that despite the current situation of financial tightness – which has even led to more than 20,000 Portuguese asking Deco for help – the rate of defaults has increased by 0.5 percentage points decreased (pp) in the ninth month compared to the previous month, to 2.7%, and 0.9 pp compared to September 2022.
However, it should be remembered that the entity led by Mário Centeno points out in the November Financial Stability Report the increase in defaults by the most vulnerable families as the main risk to the Portuguese banking system. The situation is therefore expected to deteriorate in the coming months, despite the fact that the risk profile of new borrowers has improved following the macroprudential recommendation.
Within the production volume of ASFAC members, which represent 61% of consumer credit in Portugal and control 77% of car credit, 45% of personal credit and 65% of credit cards, the total amount financed to private individuals increased to 4 .76 billion euros in the first nine months of the year, reflecting a slowdown of almost 8% compared to the 5.15 billion euros recorded in the same period last year, despite growth of more than 3% compared to all months of April, May and June. BNP Paribas, Cofidis, Unicre and BMW Group are some of the credit institutions specialized in consumer finance that make up the list of 26.
Despite the clear trend of increases in the quarter and decreases in the same period, the association saw a decrease of 0.2% in the personal loans segment between July and September, compared to the second quarter of 2023, and 16% compared to the 2022. As for the other segments, car financing increased by 9% year on year (12% more in credits, but 70% less ALD and leasing) and by 4% compared to the previous quarter (5% increase in credits, but 70 % less ALD and leasing) credit and decrease 47% ALD and leasing). In turn, ASFAC found a year-over-year decline of 24% and an increase of 8% compared to the second quarter of this year.
The Portuguese version of the Bank Credit Market Survey, which compiles the report of financial institutions and their respective forecasts for the fourth and last quarters of the year, expects a continued decline in demand for loans for consumption and other purposes, as well as a greater tightening. in the criteria for granting this type of credit.
Source: DN
