Deposits in the third quarter of 2012 grew by only 8.8 percent year-on-year, down from 13.5 percent during the same period a year ago.
TIRANA, Nov. 5 – While bad loans hit a record 22.3 percent, both lending and deposit growth rates significantly slowed down in the third quarter of 2012 unveiling the tight lending standards banks are applying, poor demand for new loans, and reduction in saving trend despite domestic consumption remaining at poor rates. Latest quarterly Bank of Albania data show credit to businesses decelerated to 9.2 percent year-on-year in the third quarter of 2012, down from 19 percent in the third quarter of 2011. In July-September 2012, total credit to business climbed to 403 bln lek, up from 369 bln lek a year ago. The severe situation with lending is better unveiled with the performance of credit to individuals which in the first three quarters of 2012 shrank by 3.9 percent. A year ago, credit to individuals grew by 5.3 percent in the first three quarters. Loans to individuals dropped to 142 billion lek in the third quarter of 2012 down from 147.7 billion lek in the third quarter of 2011. While consumer loans have preserved their 2011 rates, the situation with home loans appears pessimistic with the credit portfolio having dropped by 4.7 percent only in Tirana.
The crisis impacts have also reduced citizens saving trend, with deposits in the third quarter of 2012 increasing by only 8.8 percent, down from 13.5 percent during the same period a year ago.
At a time when domestic consumption and investments remain sluggish preventing the country’s economic recovery, Albanians continue depositing considerable amounts in banks in 2011 uncertain about their futures and fearing a possible escalation of the crisis. Meanwhile, lending continues growing moderately at slightly more than 10 percent compared to the pre-crisis levels of 30 to 50 percent.
Differently from loans, 63 percent of which are issued in foreign currency, mainly in Euro, the situation with deposits appears more balanced with lek deposits accounting for 52 percent of total deposits.
