TIRANA, Oct. 28 – The write-off of 11 billion lek (Euro 77.6 million) in non-performing loans from banks’ balance sheets was key contributor to the reduction of the NPLs to 21 percent at the end of the first half of this year.
Albania’s central bank says the value of NPLs dropped by 8 percent to 152 billion lek (Euro 1.07 billion) at the end of June 2015 fuelled by changes making it compulsory to write-off of bad loans for more than three years and acceleration of collateral execution.
A new package of measures drafted by the Albanian government and the central bank is targeting to tackle non-performing loans for 35 companies which are estimated to hold around half of NPLs in Albania. The companies in cases will either have their loans restructured or put into bankruptcy whose procedures will be accelerated under a new draft in its final stage of review.
Banks posted surprise profits of about 59 million euros in the first half of this year as non-performing loans dropped by 4 percent to 20 percent but lending strived to remain at positive growth rates.
Non-performing loans have more than trebled in the past six crisis years, becoming a drag on economic growth and lending which has been struggling with sluggish growth rates in the past couple of years.
In its latest country report on Albania, the IMF says recent regulatory and legal changes to facilitate collateral execution and increase loan write-offs are showing modest results.
“A new regulation requiring mandatory write-off of loans categorized as ‘lost’ for more than three years came into force at the beginning of 2015 and is expected to reduce non-performing loans by 3 percentage points,” says the IMF.
