Lending to businesses down by 2.8%

TIRANA, Dec. 11 – Hit by a sharp drop in loans to the ailing construction sector, lending to businesses shrank by 2.8 percent year-on-year in the first ten months of this year, according to central bank data. Meanwhile, lending to households slightly rose by 0.7 percent compared to the first ten months of 2012.
The situation for businesses was first of all affected by a sharp decline in lending to the crisis-hit construction sector which dropped by sharp 20 percent to a total 54 billion lek at the end of October 2013, registering similar levels to September 2008 just before the onset of the global crisis.
Detailed data show “trade, repair of cars and household equipment” holds the majority share of lending with 128 billion lek or 34 percent of total lending to businesses. Lending to this group declined by 5 percent year-on-year in October 2013. Next come the processing industry with 57 billion lek, down 5 percent compared to October 2012. Loans to the “production, distribution of electricity, gas and water” registered a 19 percent increase in October 2013 with a total of 51 billion lek.
Despite accounting for almost 20 percent of the GDP and employing half of the country’s population, the agriculture sector is one of the least financed sectors by commercial banks. Total lending to the agriculture sector at the end of October 2013 was at 5.8 billion lek, up 5 percent compared to a year ago but accounting for only 1.5 percent of total lending to businesses.