Non-banking sector shrinks

TIRANA, April 30 – Albania’s non-banking financial sector, dominated by micro-credit financial institutions and insurance companies shrank to 5.3 percent of the total financial system at the end of 2011, compared to 5.7 percent at the end of 2010, according to data made available in the latest Bank of Albania financial stability report. The non-banking financial sector, composed of financial institutions supervised by the central bank and the Financial Supervisory Authority, represented 4.7 percent of the GDP at the end of 2011 compared to 4.9 percent in December 2010.
Non-banking financial institutions assets at the end of 2011 are reported at 34.4 billion lek, up 1.6 billion lek compared to a year ago, with lending accounting for 58.3 percent of the total assets.
The sector is dominated by non-banking financial institutions whose assets account for 2.9 percent of the total, followed by insurance companies at 1.5 percent, credit-saving unions at 0.8 percent and the private pension funds at their initial stages representing only 0.01 percent of the GDP.
Despite bad loans at non-banking financial institutions rising to 7.6 percent in 2011 compared to 5.9 percent in 2010, their net profits rose to 1.1 billion lek, up from 979 million lek in 2010.
In its latest report, the European Commission concludes that there remains insufficient administrative capacity in the non-banking financial sector to enforce market surveillance and proper implementation of legislation. “Further efforts are needed with regard to the securities markets. Investment services legislation and infrastructure are at an early stage.”