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Spanish banks need to increase provisions amid economic slowdown, De Cos says

MADRID, Oct 4 (Reuters) – Spanish banks will have to closely monitor risks and increase provisions to cover potential losses as an economic slowdown and energy price hikes are already hurting households and companies, Bank of Spain Governor Pablo Hernandez de Cos said on Tuesday.

De Cos said that a very complex macro-financial situation, marked by high inflation, tighter financing conditions and increased uncertainty, had already led to a slowdown in the Spanish economic activity “in the third quarter and a general downward revision of the growth outlook for the following quarters.”

On Monday, the Spanish government lowered its economic growth outlook for 2023 to 2.1% from 2.7% previously.

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Though higher interest rates are expected to boost banks’ financial margins in the short-term, financial supervisors have recently cautioned against the risks to financial stability…

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