Second-tier banks operating in Albania have increased reserves for unpaid loans, reports the local press (Agon, 20.10.2009). This has been the consequence of the increase in the number of bad credits in the former months, suggests Agon’s business editor, Aura Bufasi, who believes the second-tier banks have become more prudent as regards crediting policies.
This information comes from the data released in the latest report of the Bank of Albania (BoA) concerning the stability of the financial system in Albania for the first six months of 2009.
“At the end of June 2009 bad credits represented 8.7 % of the value of the whole portfolio of credits”, writes the central bank (BoA).
As a consequence, the second-tier banks have increased their reserves for unpaid loans which, in turn, has affected the financial results of the banks during this period, informs Agon. These results have, however, been globally encouraging, since banking as a sector displayed a positive financial result at the end of the first six months of the year amounting to 0.66 billion Albanian Lek (nearly 66 million US Dollars).
The capitalization of the banks has also been judged satisfactory for the 6 first months of the year. “The slow-down of high-risk investments, the continuing positive financial result, the non-distribution of profits and the augmentation of capital from the share-holders have contributed to the conservation of the stability of the indexes of capitalization of the activity of the second-level banks”, estimates the Bank of Albania (BoA).
The central bank judges positively another important situation, the situation of the liquidity of the banks. For the first six months the indices of the banking system have been judged satisfactory, which makes analysts assert that the Albanian banking sector has resisted to the effects of the global financial crisis.
BoA reports a return of the deposits that were withdrawn in the last months of 2008 and in the first months of 2009. According to the central bank, in June the banking system collected 1/3 of the withdrawn deposits. According to experts who highlight that process of return deposits it has not yet resulted in similar funds as those before the beginning of the phenomenon of withdrawal. The progressive and stable return of the deposits in the banking system is a gage of the rebuilding of the capacities of the banking system to lend the economy.
