Experts said the tight lending standards were influenced by specific problems in the sectors where businesses operate, the macroeconomic situation and the individuals’ financial situation
TIRANA, August 9 – Lending standards during the second quarter of this year remained tight for businesses and eased somehow for individuals, according to a lending survey carried out by the Bank of Albania.
Data show lending standards applied to small and medium-sized enterprises remained tight while big businesses had their standards eased for the second quarter in a row.
Banking experts said the tight lending standards were influenced by specific problems in the sectors where businesses operate, the macroeconomic situation and the individuals’ financial situation.
Survey data showed there was an increase in demand for loans by small and medium-sized enterprises and individuals. Meanwhile, corporations and individuals’ demand for home loans dropped.
The tighter policies for commercial loans came as a result of an increase in the number of bad loans and rising demand for collateral.
Consumer loans standards were somehow eased through lower commissions and the increase in the loan maximum deadline.
According to the survey, banks expect lending standards to ease both for commercial and consumer loans during the third quarter of 2010. Banking experts expect less strict standards to be applied for working capital loans than investments. Loans to individuals will be easier for home purchase. Experts also expect an increase in demand for loans by corporations.
The competition in the banking sector was the only factor which had a positive contribution to the ease of lending standards in the second quarter, said the survey. Its net balance reached the positive rate of +4.5 percent for the first time since the second quarter of 2009.
The survey said the individuals’ demand for loans dropped because of a decrease in demand for home loans. Experts explain the situation with the deterioration in the consumer confidence index, developments in the real estate market and the perception of tighter lending criteria standard.
Banks also expect a bigger increase in loans in the national currency lek and lower interest rates for loans both in lek and foreign currency for the remaining of 2010.
The main factors pushing businesses and individuals to apply for loans in foreign currency, which accounts for almost 70 percent of the total lending, is the difference in interest rates and income and prices in foreign currency, mostly euro.
Lending standards during the first quarter of 2010 were eased for businesses but further tightened for individuals, the Bank of Albania said in its first monetary policy report for this year. The progress of lending standards for businesses was in line to the banks’ expectations in the fourth quarter of 2009.
The survey carried out last July covers developments in the lending activity of the April-June period and banks’ expectations of possible changes in their lending criteria during the third quarter of this year.
