TIRANA, June 19- The non-repayable loans in banks have increased in the first four months of the year after reaching in December last year, the lowest level since 2010. According to Bank of Albania’s statistics, the non-performing loans ratio increased by 0.08 percentage points from the previous month, reaching 11.46 percent of total loans granted by banks to businesses, individuals and others. This indicator had fallen to 11.08 percent in December, from 13.28 percent in December 2017. In absolute terms, loans received from businesses and individuals, which are more than three months late in installment repayments, were 500 million euros.
Compared with December 2018, banks’ portfolios have also added 30 million euros in debt that is lagging behind. The banking system saw a decline in the level of non-performing loans during last year. The Bank of Albania estimated that the decline of non-performing loans, alongside the improvement of economic activity, reflects the commitment of banks in meeting the plan of measures to reduce these loans. Clearing banks’ balances on non-performing loans and consolidating the banking system is expected to help sustainably increase credit in the future. But at least in the first four months of the year, this trend is not being observed, signaling difficulties in business activity which bear the largest share of problematic loans.
A recent report made by the European Banking Coordination Initiative in Vienna stated that despite the downturn, Albania has the highest level of non-performing loans (NPL) of its banking sector from 17 countries in Central, Eastern and Southeastern Europe (CESEE) over the 12 months to September 2018. The NPL ratio in Albania fell by 1.9 percentage points year-on-year to 12.9 percent at the end of September, but remained the highest in the region, according to the CESEE half-yearly instrument, published by the “NPL Initiative,” a subset of the Vienna Initiative. Only two countries remain above the 10 percent threshold at CESEE, Albania at 12.9 percent and Croatia with 10.2 percent.
