Bad debts at Italian banks rise further in July - Bank of Italy

MILAN (Reuters) - Bad debts at Italian banks rose 22.2 percent in July from a year earlier, Bank of Italy data showed on Monday, highlighting the impact that a prolonged economic recession is having on banks' loan portfolios. The rate of increase in problematic loans stood at 21.9 percent in June, the Bank of Italy said. Italian lenders continued to curb lending as they strive to keep credit risks in check. Loans to non-financial firms fell 4.1 percent in July, as in the previous month. Lending to households contracted by 1.1 percent from the same month of 2012, following a 1.0 percent drop in June. Rates on house mortgages increased slightly to 3.96 percent from 3.90 percent a month before. Loans to companies also became more expensive with the average rate on loans of up to 1 million euros rising to 4.41 percent from 4.30 percent. The average cost of bigger loans rose to 2.96 percent from 2.77 percent. (Reporting by Valentina Za)