Bad loans increase to 11.5% of total portfolio

TIRANA, June 8 – Bad loans continued increasing even during the first quarter of this year reaching 11.46 of the total loan portfolio, according to Bank of Albania statistics.
Data show problematic loans increased by 1.2 percent compared to the last quarter of 2010, reaching 49 billion lek (490 million dollars)
Loans which did not meet bank standards increased to 5.4 percent, up from 4.7 percent at the end of 2009. Lost loans also increased by 0.3 percent reaching 3.2 percent at the end of the first quarter. Doubtful loans also rose by 0.2 percent accounting for 2.9 percent of the total loan portfolio.
Banking sector experts say there are a number of causes that have led to strong growth of bad loans. They include shrinking family incomes, businesses in crisis and depreciation of the local currency, mainly against the euro. These factors have made it harder for people to pay back the banks for loans they took in better times.
Meanwhile, the loan portfolio of commercial banks in Albania totalled $4.03 billion or 3.28 billion euros at the end of April, up 7.7 percent from a year earlier, central bank statistics indicated.
On a monthly basis, the Albanian the banks’ end-April credit portfolio was 0.3 percent higher.
At the end of 2009 the banks’ credit portfolio totalled 440.4 billion leks, up 11.1% on the year.
The deposit portfolio of commercial banks operating in Albania totalled 693.198 billion leks ($6.21 billion/5.05 billion euro) at the end of April, 14.1% higher than a year earlier, central bank data indicated.
The Albanian banks’ end-April deposit portfolio was 0.1% higher than a month earlier
Lending standards during the first quarter of 2010 were eased for businesses but further tightened for individuals, the Bank of Albania said in its monetary policy report.
Second-tier banks operating in Albania said they would further tighten lending standards in the second-quarter of this year for both businesses and individuals, according to a recent survey conducted by the central bank. Lending criteria are expected to tighten for small and medium sized enterprises as well as corporations, differently from the first quarter of this year when standards for businesses were eased.