Spain's central bank says the level of bad debt in the country's banks dropped to 10.4 percent in December 2012 from 11.38 percent a month earlier due to the transfer of toxic assets to the country's new bad bank.
The bank released data Monday showing non-performing loans totaled €167.48 billion ($223.17 billion) in December, down from €191.63 billion the previous month — the first reduction in 17 months.
Spanish lenders, hit by the country's property market collapse in 2008, have begun transferring their toxic loans to the bad bank, called SAREB. The body was set up as a condition of Spain receiving €40 billion in European Union assistance for its financial sector.
With 26 percent unemployment, Spain is struggling to emerge from its second recession in just over three years.