BoA governor appeals for more credit to SMEs

TIRANA, April 12 – Bank of Albania governor Ardian Fullani has called on commercial banks operating in Albania to accelerate lending as a necessity supporting not only the economy and customers, but also banks. “There exists necessary space for banks to support lending to small and medium sized enterprises and offer more financing opportunities in the national currency, lek,” said Fullani on Tuesday addressing the 24th conference of the Group of Banking Supervisors from Central and Eastern Europe (BSCEE) held in Tirana.
The governor called on the 16 commercial banks operating in Albania to cooperate with their customers in case of temporary difficulty in paying off installments but be strict and act in time executing collateral in case of identifying bad loans.
“These actions are important under conditions when the Bank of Albania estimates that lending will continue facing a challenging environment and targeted improvements in credit quality will require more time to be put in place,” added Fullani.
The governor also stressed the need for central banks to switch to the detection and prevention role, building a group of measurable indicators to prevent macro-prudential problems.
The International Monetary Fund expected the private credit growth to drop to 8.6 percent of the GDP in 2010, down from 10.3 percent in 2009 and 32.1 percent in 2008 when the global crisis started. Meanwhile, deposits are reported to have grown by 15.5 percent in 2010.
After a slowdown in January 2011, total lending in February 2011 rose by 4.8 billion lek (48 million dollars) compared to the previous month and 40.5 billion lek year-on-year. The latest data published by the country’s central bank show total lending in February 2011 was up 8.5 percent compared to February 2010 but only 1.1 percent compared to January 2011. The majority of business loans are granted in Euro, which accounts for 66 percent of total lending of 334 billion lek. Second comes the national currency, lek, with 27 percent of total lending.
The majority of business loans are taken to finance purchase of equipment and real estate.
Lending to individuals in February 2011 slightly increased by 628 million lek compared to January 2011 but was up 3.7 billion lek compared to Feb. 2010. Even for individuals, the majority of loans are granted in euro, mostly for home purchase.
Meanwhile, total deposits in February 2010 dropped by 2.6 billion lek compared to January 2011 but were up 10 billion lek year-on-year.