TIRANA, July 28 – Facing a slowdown in lending due to poor demand and the high level of non-performing loans, the 16 overwhelming foreign-owned banks operating in Albania cut operating costs by reducing the number bank branches and agencies and cutting staff to keep their profits growing.
Data published by the country’s central bank in its annual supervisory report show the number of commercial banks operating in Albania remained unchanged at 16 for the eighth year but the number of their branches and agencies in the country in 2014 was cut to 499, down from 529 in 2013, a record high of 638 in 2011 and 524 in 2009 just after the onset of the global financial crisis.
Meanwhile, the number of bank employees was also cut to 6,819, down from 6,686 in 2013, a record high of 6,836 in 2012 and up from 6,404 in 2009.
The country’s biggest region of Tirana, where around a third of Albania’s population lives, had its number of branches and agencies, cut by 10 to 203, followed by the southern region of Vlora where the number was cut by four to 37.
The number of saving and credit associations operating in rural areas and mostly involved in agriculture micro-credit, also dropped by 8 to 113 in 2014, the lowest number in the past decade.
Meanwhile, the number of non-bank financial institutions rose by 1 to 22 while the number of currency exchange stores rose to a record high of 356, up from 333 in 2013 and 221 in 2009.
The closure of some branches has not affected the banking system which remains profitable, well-capitalized and liquid despite non-performing loans at around a quarter.
Banks’ profits reached a historic high of 11.2 billion lek (Euro 78.4 million) in 2014 as bad loans registered a slight decrease and provisioning against loss more than halved.
Data published by the country’s central bank shows banks’ profits grew by a record 70 percent in 2014, breaking even their 2007 record of 10.5 billion lek (Euro 74 million) in net profits.
Central bank data shows non-performing loans dropped to 22.76 percent at the end of 2014, down from 23.22 percent in 2013, but stayed at the same to the 2012 level, registering the first annual drop since the onset of the global financial crisis in 2008.
Latest Bank of Albania data shows credit slightly accelerated to 2.2 percent in 2014, up from a 1.25 percent decline in 2013 as the 16 overwhelmingly foreign-owned commercial banks operating in Albania continued applying tight lending standards and the consecutive cuts to the key interest rate had a small impact on reducing loan interest rates.
After growing by 30 to 50 percent annually in the pre-crisis years, lending grew by an average of 10 percent from 2009 to 2011 but sharply decelerated to 2.36 percent in 2012 and shrank by 1.25 percent in 2013 as bad loans hit a record of 24 percent.
