Bank of Spain released its data on doubtful loans for May. They increased by € 3.1bn to €155.84bn. It seems that doubtful loans are growing around €3bn each month. If this trend continues, they will be more than €20bn higher by the end of 2012 which will probably lead to an equivalent capital injection to Spanish banks.
Household deleveraging is also evident from BdE data. Mortgage loans dropped €6.4bn in May to €959.8bn and were the main driver of the drop in total loans (down €10.3bn to a total of €1740.6bn). The deleveraging rate is now almost 1% of GDP, which is close to 12% annualized. Coupled with the large capital flight annualized rate of close to 50% one can only conclude that Spain is heading for a large wall.
The above is also evident in the impairment allowances, which increased €11.65bn in May. Banks equity position is starting to fall significantly due to large drops in reserves (down €13.27bn) while net profits are still marginally negative.