UPDATE 1-Spanish banks bad loans stable in March

Mon May 19, 2014 8:23am EDT

(Adds data on repossessed homes in 2013)

MADRID May 19 (Reuters) - Spanish lenders' bad debts as a percentage of total loans was 13.4 percent in March, stable from February, as both bad loans and overall lending dropped, the central bank said on Monday.

Total credit in the financial system was 1.440 billion euros ($1.97 billion) in March, down from 1.453 billion in February, while bad loans dropped to 193 million euros from 195 million euros in February, after hitting a record high in December.

Spanish banks, crippled with sour assets after a prolonged property bubble burst in 2008, mostly forecast that bad loans will go down this year as the country returns to growth and lending picks up again.

While the situation for lenders is easing, more families lost their homes last year because they were unable to pay their mortgages, the Bank of Spain reported on Monday.

Close to 50,000 homes were repossessed in 2013, up 4.4 percent from 2012, despite the government passing rules to protect homeowners and the banks agreeing to restructure mortgages under a voluntary code of conduct.

Although the repossession rate remains low at 0.66 percent of mortgages, the issue is highly sensitive in Spain where social campaigners routinely fight the police and judges to avoid home evictions. ($1 = 0.7297 Euros) (Reporting by Julien Toyer; Editing by Fiona Ortiz)

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