TIRANA, Jan. 12 – With interest rates on loans denominated in the national currency having considerably fallen in the past couple of years, both businesses and households have shifted into borrowing in the national currency although lending in foreign currency continues dominating.
Latest data published by the country’s central bank show lending in lek for businesses increased its share to 38 percent in November 2014, up from around 35.6 percent in Nov. 2013 and only 34 percent in the same month in 2012.
Credit in euro continues dominating lending to businesses with 52 percent of the total, followed by lending in U.S dollar with around 10 percent.
The same has also happened with households with lending in euro mainly used to buy apartments sold in Europe’s single currency accounting for 50 percent, down from 53 percent in 2013. Credit in the national currency to households increased its share to 48.5 percent in Nov. 2014 up from 46 percent inn Nov. 2013.
Lending in the national currency continued gaining ground in 2013 when it increased its portfolio to a historic high of 37 despite total lending to the economy registering a slight decline. The increase in the lek-denominated loan stock positively reflects the consecutive cuts to the key interest rate by the Bank of Albania which have slightly reduced interest rates on loans denominated in the national currency.
Data shows around 63 percent of business loans are in foreign currency of which 87.2 percent in euro and 12.8 percent in U.S. dollar. Lending in foreign currency to households accounts for 54 percent, with euro-denominated loans accounting for 97.8 percent and USD loans at 1.7 percent.
Lending in the national currency lek has gained around 10 percentage points in the past four years and now accounts for more than one third of the total credit portfolio compared to only a quarter just before the onset of the global financial crisis in 2008. Lending in the national currency climbed to 37 percent in 2013, up from 35.5 percent at the end of 2012, and only 27.4 percent at the end of 2008.
Lending to the economy registered a turning point in July 2014 when it overcame a 12-month moderate decline of around 2 percent as the economy struggled with its poorest growth rate in more than a decade and bad loans stood at around a quarter.
