Albanian credit growth continues at over 50 percent

For the second straight year, the number of loans has increased by over 50 percent in Albania, and the country is drawing increased attention from well-known European banks.
Credit growth in Albania continues to stay strong, increasing by 55 percent in 2006, according to the Bank of Albania. About 1.5 billion euros in loans last year supported the Albanian economy, especially loans taken by small and medium businesses.
“The banking system in Albania has been transformed into a promoter of the country’s economic sustainability, by extending funds to the economy,” said Central Bank Governor Ardian Fullani.
For the second consecutive year, Albania is experiencing a credit boom. In 2005, loans increased by 75 percent and credit amounted to 14.6 percent of GDP. However, the country is still below the regional credit standard of 25 percent of GDP.
Some 70 percent of the loans are distributed in foreign currency – euros and dollars – due to better interest rates. Nevertheless, the percentage of loans distributed in the national currency, the lek, is on the rise. Most loans are granted for business purposes, primarily in trade, construction and industry. Recently, however, banks have been competing fiercely for the remaining market.
Although the expansion of credit can spur economic growth, central bank officials worry about a corresponding increase in uncollected debt. To address this problem, the bank is opening a credit bureau, which will scan creditors’ data to avoid fraud and build loan histories for clients.
Well-known European banks have been taking an increased interest in Albania. One of the largest banks in Italy – San Paolo Imi – bought a majority stake in the American Bank of Albania last fall. Three years ago, Austria’s Raiffeisen Bank began operating in the country, via the privatization of the state-owned Savings Bank of Albania. In all, 17 banks currently operate in Albania, most of them holding foreign capital.
“The entry into the market of distinguished European banks is an accomplishment of last year, which is expected to continue during the current year,” Fullani says. Indeed, France’s Societe Generale concluded its acquisition of a majority stake in Popular Bank – a young Albanian bank owned by a number of Albanian businessmen.
According to the Albanian business magazine, Monitor, a number of prestigious German and Austrian banks are gearing up to enter the Albanian banking sector. Germany’s Deutsche Bank, Austria’s Erste Bank, the Austrian-Italian bank Unicredito, Greece’s Eurobank and Hungary’s OTP are among those that have expressed interest in Albanian banking.