Small financial institutions may challenge banks in 2009

Small financial institutions throughout Albania have not felt the crisis that shook the international financial world in 2008. This is what the Association of the Institutions of Microfinance (Shoqata e Institucioneve t롍ikrofinanc쳬 SHIM) told the local press (Shqip, 1.09.2009). Zana Konini, who heads the association, estimated that, “Though locked in the conditions of a global economic crisis in 2008, the sector of microfinances in Albania did not suffer any negative effects, like for example lack of liquidities or increase of bad credits.”
Though bad credits have not increased, risk has augmented in loans distributed by microfinancial institutions in the former year. Shqip quotes information released by the association (SHIM), which depict an increase of risky credits from 2 % formerly to 4 % in 2008.
As 2009 follows in the banking sector with tightening loan policies towards possible creditors and with an increase of bad credits, during this year microfinancial institutions may even outperform banks. If they can do better than the banks, they cannot do more then the banks.
Altogether 5 microfinancial institutions are listed in the Association of the Institutions of Microfinance (SHIM) and operate in Albania. At the other end of the picture, 16 banks are listed in the Association of Albanian Banks and operate in the country.
All these crediting institutions, banks or small financial institutions are licensed and supervised by the central bank, Bank of Albania (BoA).
During 2008 assets in the sector of microfinances grew by 23.8 million US Dollars, loans made by 14 million US Dollars, deposits portfolio by over 2 million US Dollars, and active borrowers of 8265 clients. Over 50,000 clients have been creditors to these institutions of small-scale finance.
Microfinances took ground in Albania, by the end of 1992, in the framework of a program for the reduction of poverty in rural zones.