Lending to businesses up 13% y-o-y in April 2011

TIRANA, June 6 – Lending to businesses continues to grow at favourable rates even during the first half of this year. Latest central bank data show business loans at the end of April 2011 rose by 13 percent year-on-year and 0.9 percent compared to March 2011. Total loans to businesses in April 2011 registered 342 billion lek, a 42.6 billion lek increase year-on-year. The majority of credit is given in Euros which accounts for 63 percent of total lending to businesses. Meanwhile, credit to individuals grew by only 4.4 percent year-on-year and was up 1.2 percent compared to last March. Total lending to individuals at the end of April 2011 was 145.7 billion lek, rising by 6.3 billion lek y-o-y. Even for individuals, the majority of loans are granted in Euros. New loans during the second half of 2010 were worth 137.8 billion lek, up 11.6 percent compared to the same period at the end of 2009, according to data from a financial stability report published by the Bank of Albania. During the second half of 2010 the banking sector financially supported almost all sectors of the economy, with “trade, repair of cars and household equipment” topping the list at 31 percent, followed by construction and the processing industry at 13 percent. Loans to the production and distribution of “electricity, gas and water” also increased to 10 percent, up from 5 percent during the second half of 2009. Meanwhile, deposits continued to grow, registering an increase of 17.7 percent at the end of December 2010 compared to a year ago. Findings of a recent survey carried out by the Bank of Albania show lending standards eased for both small and medium-sized enterprises but remained unchanged for corporations. The survey says businesses’ demand for credit remained unchanged while consumers’ demand rose, especially to finance consumption and new homes. Experts expect interest rates for credit in the national currency, lek, to increase in the second quarter of this year mainly due to the monetary policy followed by the Bank of Albania, which late last March increased the key interest rate by 0.25 percent to 5.25 percent.