MADRID (Reuters) - 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 trillion pounds) 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.
(Reporting by Paul Day; Editing by Robert Hetz)