TIRANA, Oct. 3 – Faced with an ongoing decline in interest rates in traditional bank deposits, Albanian savers have turned to investments in government securities and investment funds, but also riskier forms such as online trading platforms in the past six crisis years.
While bank deposits still account for the overwhelming majority of household investment, their weight in the Albanian financial system has dropped to 81 percent in 2016 compared to 84 percent three years ago and 92 percent in 2010, according to a report by the central bank.
The declining trend has paved the way to new investment opportunities offering higher interest rates including T-bill and government bonds, which accounted for 12.4 percent of household assets at the end of the first half of 2016, worth €992 million. The weight of government securities in the financial system in 2013 was at 10.6 percent and at 8 percent in 2010.
Yields on 12-month T-bills currently stand at 1.62 percent compared to 6.6 percent in early 2013 when the key interest rate was at 3.75 percent compared to a current historic low of 1.25 percent.
Meanwhile, interest rates on 12-month lek-denominated deposits dropped to a historic low of 0.77 percent last June when the inflation rate slightly recovered to 1.2 percent, leading to withdrawal of bank deposits and the search of more profitable opportunities.
Investment funds have also gained considerable ground accounting for 6.4 percent of household investments worth 71.7 billion lek (€513 million) at the end of the first half of 2016 compared to 4.9 percent at the end of 2013 two years after their establishment.
Net asset value in the emerging private pension market has also increased to 1.1 billion lek (€7.9 million) but account for only a minor 0.1 percent of household assets in the financial system.
Albanians invested about $1 million in online trading in international stock exchanges in 2015 when several unlicensed operators emerged, triggering concern by the country’s highest financial authorities.
An annual report by the Financial Supervisory Authority shows there were 250 investors who invested about $1 million in 2015 in two operators licensed by the supervisory authority as agents of foreign brokers. More could have invested in unlicensed operators but no information is available about that.
Deposits grew by a mere 0.5 percent in the first half of this year but declined by 11 billion lek (€79 million) or 1.1 percent compared to December 2015.
