Credit to businesses shrinks in early 2012

TIRANA, April 11 – Total credit to businesses dropped by 595 million lek (Euro 4.2 million) in the first two months of 2012 compared to Dec. 2011, unveiling the banks’ tight lending standards as bad loans have reached a record high and businesses remain pessimistic over new investments. Bank of Albania data show total credit to businesses in Feb. 2012 stood at 388.8 billion lek, down 0.15 percent compared to last December and up 16.4 percent year-on-year.
Most credit is taken to finance the “trade, and repair of cars and household equipment” accounting for 30 percent of total credit to businesses in Tirana. The construction sector and the processing industry rank second and third with a 19 percent and 14 percent share respectively.
Most credit to businesses is taken in Euro, accounting for 60 percent of the total, while the national currency lek has a 30 percent share.
Meanwhile, credit to individuals slightly rose by 110 million lek (Euro 773,000), up 0.7 percent compared to last December but was down 0.4 percent year-on-year.
Credit to individuals accounts for 26.7 percent of total credit with lending in Euro accounting having a majority of around 55 percent.
Albanians’ saving trend continued rising with deposits in euro, lek and US dollars recording moderate increases.
Despite bad loans climbing to a record 19 percent, lending recorded a 13 percent increase in 2011, the highest annual growth rate since 2008 when lending grew by 35 percent. Meanwhile, deposits registered a considerable 11.7 percent increase.