TIRANA, April 18 – Albania’s banking system cut dozens of branches and jobs nationwide last year as lending remained sluggish and e-banking gradually expanded despite banks registering record high profits.
Data published by the Albanian Association of Banks shows the 16-overwhelmingly foreign-owned banks operating in Albania cut the number of outlets by 24 to 479, down from a record 552 in 2011 and 517 a decade ago at the onset of the global financial crisis when credit was booming.
Meanwhile, the number of employees at commercial banks dropped to 6,894 in 2017, when 56 jobs were cut compared to the previous year. With credit struggling to recover amid declining but still high non-performing loans, banks have increased staff by only 560 employees over the past decade.
Closing down physical branches has become a global trend in the past few years as digital banking gains constant ground with smartphone apps offering 24/7 access to accounts.
An annual report by the country’s central bank shows almost all banks now offer home banking services and 11 percent of bank accounts are now accessed online compared to only 1 percent a decade ago.
However, the number of transactions per home banking account at about 14 annually remains low unveiling the customers’ need to get familiar with online banking.
German-owned ProCredit Bank cut 11 outlets last year as it moves toward digital banking. Italian-owned Veneto Bank which last year was acquired by Intesasanpaolo Bank also closed down 10 branches in Albania.
Turkish-owned BKT, Austria’s Raiffeisen and Albanian-owned Credins bank were the top three banks in terms of assets that include loans, investment in securities and interbank placement at the end of 2017.
Banks are expected to further cut branches and staff this year following two internal market acquisitions in the past year, leading to restructuring that could also cut the number of commercial banks in the country to 14 if the acquisitions are rebranded.
In early 2018, the Albanian subsidiary of the National Bank of Greece was acquired by the American Bank of Investments, an American-Albanian bank that has been operating in Albania since 2016.
Back in mid-2017, Italy’s Intesa Sanpaolo Albania unit, the country’s fourth largest bank acquired the bankrupt Veneto Bank in Italy and its subsidiaries in several European countries including Albania.
Bank of Albania data shows the 16 overwhelmingly foreign-owned banks operating in Albania posted record profits of about 22 billion lek (€165 mln) in 2017, more than double compared to 2016 and breaking a previous record of about 15.7 billion lek (€116 mln) in 2015.
The record high profits come at a time when credit struggled to remain at positive growth rates, registering a mere 0.5 growth rate but moderate rates of about 3 percent when adjusted for the exchange rate effect and the NPL write-offs.
Non-performing loans, a key barrier that has been keeping lending standards tight, dropped by an annual 5 percent to 13.23 percent at the end of 2017 and were about 12 percent lower compared to the peak 25 percent level in mid-2014.
The country’s banking system is considered as well-capitalized, liquid and profitable.
However, in its latest statement, the IMF recommends that “ensuring that new market entrants have solid banking experience and meet fit and proper criteria to operate in the Albanian banking market will be critical.”
