Savings and Credit Associations in Albania have significantly increased crediting in rural areas during 2016, according to Central Bank. Last year, crediting amounted to 5.5 billion Lek or up by 14.3 percent compared to 2015. Deposits in Savings and Credit Associations were up by 30 percent, meeting almost 88 percent of crediting needs.
Central Bank says that Savings and Credit Associations are an important factor for the country’s economy, particularly in rural areas.
In the meantime, second tier banks have also boosted consumer loans in 2016. Bank of Albania statistics show that consumer loans were up by 12% jumping to 39 billion Lek or 285 million euros (excluding overdrafts.)
Second tier banks have mostly focused their attention to individuals, being less exposed to crediting risks. Bank lending in 2016 was at a high level, mostly targeting clients will a salary account. Loan demands in 2016 was also high, according to Central Bank.
Bank profits in 2016 were in decline by 41 percent, according to Central Bank. Quarterly statistics show that the gross profits of the banking sector amounted to 9.27 billion lek or 67 million euros, down by 41% compared to 2015.
Bank of Albania argues that the decrease in gross profits was a result of high expenses for provisions and an ongoing drop of income from interest rates.
Bank provision funds in this period quadrupled amounting to 18.4 billion Lek. By the end of 2015, non-performing loans dropped to 18.22 percent of the total portfolio while in August 2016, they peaked at 21.44% of the loan portfolio.
In 2016, second tier banks undertook important measures to reduce non-performing loans, by writing off loans that had not been paid at least for three years. The write off process pushed NPLs down to 18.3% at the end of 2016.
Bank experts told AgroWeb.org that bank profits were not at a satisfactory level considering that the capital adequacy ratio in 2016 was 6.6% down from the set average of 15%./AgroWeb.org