Bank of Albania data show total lending in February 2013 reached 551 billion lek, up only 1.6 percent year-on-year, while deposits grew by around 56 billion lek to 937.4 billion lek in 2012, registering a 6 percent increase
TIRANA, April 2 – While deposits continue maintaining their growing trend, lending slowed down to the lowest historic levels in the first two months of 2013. Bank of Albania data show total lending in February 2013 reached 551 billion lek, up only 1.6 percent year-on-year. Meanwhile, deposits continue maintaining their positive growth trend, unveiling consumers’ saving trend and uncertainty about escalating crisis impacts. At the end of February 2013, total deposits reached 933 billion, up only 6 percent year-on-year.
Lending has almost frozen after growing by an average of 10 percent in the past three years compared to the pre-crisis levels of 30 to 50 percent. Lending sharply decelerated to 2.36 percent at the end of 2012, down from 12 percent in 2012. In the global crisis year of 2009 credit growth slowed down to 11 percent and decelerated to 9.6 percent in 2010, according to Bank of Albania data.
Central bank data show deposits grew by around 56 billion lek to 937.4 billion lek in 2012, registering a 6.36 percent increase, sharply lower compared to 11.7 percent in 2011 and 18.5 percent growth rate in 2010, but better compared to 2008 and 2009 at 2.2 percent and 6 percent respectively.
Bad loans at a record 22 percent and falling demand by both businesses and individuals for new loans have considerably affected credit growth which is struggling to preserve its growth rates, registering the lowest rates in the past decade.
Latest data available shows that the ratio for loans and deposits denominated in Albanian lek represented 39 percent of total loans and 50 percent of total deposits respectively.
Interest rates
The Bank of Albania has cut the key interest rate by 1.5 percentage points to a historic low of 3.75 percent since Sept. 2011 in an effort to stimulate the economy but the moves have been poorly reflected in lower loan interest rates and an increase in investments. The latest cut was made late last January when the central bank decided to cut the interest rate by another 0.25 percentage points to a record low of 3.75 percent.
The moves have considerably lowered yields on T-bills, slightly reducing the cost of the public debt, but have a had a minor impact on lowering interest rates for lending in the domestic currency, which accounts for 40 percent of the total lending.
Average interest rates on lek-denominated loans climbed to 11.78 percent in February 2013, up from 9.88 percent in January 2013 and 11.39 percent in February 2012.
Interest rated on Euro-denominated loans also climbed to 7.03 percent in February 2013, up from 6.13 percent in January 2013 and 6.9 percent in February 2012.
Meanwhile, interest rates on 12-month lek-denominated deposits also climbed to 5.25 percent up from 5.07 percent in January 2013 and 5.62 percent in February 2012. Interest rates on 12-month Euro-denominated deposits also climbed to 2.79 percent, up from 2.74 percent in January 2013 and 3.14 percent in February 2012.
12 month T-bill yields dropped to 6.13 percent in the latest Bank of Albania auction in March 2013 down from 6.21 percent in the previous auction
Yields on 12-month T-bills dropped to 6.53 percent in the latest January 29 auction, down from 6.6 percent previously, and a record 7.5 percent in March 2012.
