Companies want to avoid defaulting on their debts. Therefore, before reaching this point, companies renegotiate the terms of their debts, credits and loans to avoid increasing delinquencies. And it seems that they are achieving this. The data shows that the delinquencies that seemed likely to arise are still being contained. This happens among individuals, but especially in companies. Latest data from the Bank of Spain for the second quarter shows that The doubtful ratio was 4%, down from the previous quarter’s 4.1%..

In the case of Ibercaja, arrears in business banking increased by only five hundredths over the year. reaching 2.43%, which is below the sector average. The overall level of overdue debt of the enterprise is 1.8%. Teresa Fernandez, director of business banking at Ibercaja, explains that companies had a “very good” year and adds that debt restructuring continued. In fact, he rates this growth as “healthy.”

“Companies are the first to understand and tell you: we need to sit down and talk. They notify us before non-payment is received.”Fernandez celebrates. However, he recognizes that delinquency rates may continue to rise, although he is optimistic about the outlook. The enterprise’s director of business banking notes that they are, however, “prudent” and are working on a scenario of rising defaults through 2024 as interest rate increases are digested.

Likewise, the organization explains, companies fail to pay their debts because they need that money to continue investing and creating operations. Thus, It is more normal for them to renegotiate and restructure the debt before paying it off.

This low default scenario occurs when Ibercaja increases its business loan. Specifically, between January and October 2023, Ibercaja increased its credit balance by 2% to €6.559 million, allowing it to gain 8 points of market share for the year to 1.60% at the October close. It is worth highlighting this behavior compared to that of the sector, which has reduced its credit balance by 5.08%, leaving Ibercaja to grow 5.29% more than the sector in 2023, Fernandez said. This is the third year in a row that Ibercaja has reported better relative performance, as the bank increased its loan balance by 9% in 2021 versus 0.40% for the sector; and in 2022 it grew by 4.5%, while the sector contracted by 0.60%. Loans to companies account for 25% of Ibercaja’s total loans.

Contractual volume of revolving credit for the first ten months of 2023: €8.417 million, representing an increase of 7% compared to the same period of the previous year. The company plans to exceed 10,000 million euros by the end of the year and exceed this level for the second year in a row. “In particular, specific international business products have become particularly relevant and have become a key driver of our growth.”

Between January and October, Ibercaja has attracted 4,816 client companieswhich represents an increase of 17.5% compared to the same period in 2022. Since 2021, when it launched its business banking division, the firm has onboarded 15,000 companies, allowing it to grow its client balance to over 73,000 client companies.

If customer resources are added to the loan, Ibercaja will manage 12,000 million euros from these 73,000 business customers. 72% of this balance belongs to SMEs and micro-enterprises.

About the future, Fernandez regrets that there will be no “investor joy”, but he hopes that at least this investment will not decrease. In the coming months, Ibercaja forecasts that interest rates will fall to 2.5% in 2025. “2024 could be the fourth year in a row that growth returns, with worst-case forecasts of a possible entry into recession not coming true.” will be a more favorable year for business investments, which cannot be postponed indefinitely.”

This will happen if, as Fernandez points out, business profitability is maintained, since it is the “key economic variable” that motivates companies to undertake investment projects; if current uncertainty will be redirected and, in particular, if a legal, financial and labor framework will be created that will encourage investment; and that the channeling of European “next generation” funds into the productive structure should be accelerated, now in their version of “soft finance”, “an area in which banking institutions can make a big contribution to their distribution, efficiency and capillarity, just as” We demonstrating, for example, ICO Covid liquidity lines.”