MADRID Aug 18 Spanish banks' bad debts as a percentage of total loans was 13.1 percent in June, down slightly from 13.4 percent a month earlier, as bad loans dropped while overall lending rose.
Total credit in the financial system was 1.42 trillion euros (1.90 trillion US dollar) in June, up from 1.41 trillion euros a month earlier, data from the Bank of Spain released on Monday showed.
Bad loans dropped to 185.9 billion euros in June from 189.4 billion euros in May, after hitting a record high in January.
Spanish banks forecast bad loans will peak this year as the country pulls out of recession. (1 US dollar = 0.7470 euro) (Reporting by Paul Day; Editing by Robert Hetz)