Albanian banks report growth in central eastern Europe

TIRANA, Sept. 18 – A report on the CEE banking markets showed good records for the Albanian banking system with strong growth in credit in 2005. On 12 June 2006, Albania signed its Stabilization and Association Agreement with the European Union, the first formal step to eventual EU membership.
However, it is unclear how quickly Albania will gain candidate status or even start membership negotiations with the EU. With regard to the economy and the banking sector, both enjoyed strong growth in 2005. Total banking assets increased by 20% in 2005, reaching 58.1% of GDP. But the spectacular development was credit growth, which strongly accelerated in 2005. Both, credits to private companies as well as to households, increased close to 90% yoy in EUR terms. Still, at 14.9% of GDP, the level of outstanding total credits in Albania remains the
lowest as a percentage of GDP in all of CEE, pointing out both the current stage of development of the banking sector and the potential for future growth. Despite the almost doubled credit volume in 2005, total deposits in Albania still greatly outweigh credits with a ratio of 342.5% of total credits. Today, the major banks in Albania are majority foreign-owned. Raiffeisen Bank, the former Savings Bank of Albania, is the largest bank with a market share of more than 40% of total assets as at yearend 2005. In December 2005, Italian banking group Sanpaolo IMI bought an 80% stake of Italian Albanian Bank. Overall, a further positive development is expected for the banking system as a whole, in particular in the area of lending to the economy.