Some 13.2 million card transactions, worth 130 billion lek (Euro 911 million) were processed in 2013 from ATMs and POSs, with cash withdrawals from ATMs accounting for 88.7 percent and POS payments with 11.3 percent.
TIRANA, July 15 – The Albanian economy continues remaining largely cash-based despite the number of debit and credit cards rising, a situation unveiling the high informality of the Albanian economy estimated at 30 percent of the GDP.
The latest 2013 annual report by the Bank of Albania shows cash withdrawals dominate card transactions with around 89 percent, a situation which has improved compared to a couple of year ago when the rate was at 96 percent.
Some 13.2 million card transactions, worth 130 billion lek (Euro 911 million) were processed in 2013 from ATMs and POSs, with cash withdrawals from ATMs accounting for 88.7 percent and POS payments with 11.3 percent. While debit card payments account for 57.8 percent of total transactions in POS terminals, credit card payments dominate as far as the amount of transaction is concerned.
The central bank reports a 5 percent increase in the number of bank cards with debit cards accounting for 92 percent of total cards in circulation. The Albanian Association of Banks reports the number of bank cards rose by 5 percent to 805,560 at the end of 2013 with debit cards at around 720,000. Home banking, a service introduced in 2005, also registered a 37 percent increase and is now offered by 11 out of 16 commercial banks operating in Albania.
The central bank says the number of bank branches and agencies, dropped by 9 to 529 nationwide, a situation showing the difficult situation banks are facing as lending stands at moderate negative growth rates and bad loans at around 24 percent.
Albania’s banking system remains well capitalized, liquid and provisioning appears to be adequate but high financial euroization, low profitability and non-performing loans being the highest in the region are a significant risk to the banking system, says the IMF in its financial system stability report after a mission visited Albania in late 2013 at a request by Albanian authorities.
The Albanian banking system is concentrated and foreign ownership dominates, with the preponderance of foreign institutions headquartered in EU countries. Out of 16 operating banks, the largest five hold about three-quarters of system assets and deposits. Bank credit is concentrated in the corporate sector (representing 74 percent of loans in 2012) and in few economic sectors, with 45 percent channeled to the trade sector, 22 percent to construction, and 20 percent to industry. Subsidiaries of foreign banks represent about 93 percent of total banking sector assets.
