Bad loans fell below 4% in 18 years/Non-performing loans indicator remains at healthy levels
The non-performing loan ratio in the Albanian banking system fell to 3.8% at the end of 2025, marking the lowest level recorded since March 2008, when it was estimated at 3.92%. Official data from the Bank of Albania show a further improvement in the quality of the loan portfolio, after a continuous decline that began in 2017 and 2018.
So, non-performing loans fell below 4% for the first time in 2018.
In December 2024, the non-performing loan ratio was at 4.17%, while during most of 2025 it fluctuated around the 4% mark. Only in the last month of the year, the indicator marked a sharper decline, from 4.19% in November to 3.8% in December.
According to common practice, the most pronounced decrease in December is related to the cleaning of balance sheets from bad loans, by taking them off the balance sheet before the end of the financial year. A positive impact was also provided by the rapid expansion of the loan portfolio at the end of the year.
On the other hand, the strong growth of the loan portfolio in the last month of the year is also estimated to have positively affected the non-performing loan ratio.
In the Albanian banking sector, the non-performing loan ratio is an essential indicator to measure the quality of a bank's loan portfolio. These indicators demonstrate that the banking system has the ability to withstand risks.
Compared to last year, non-performing loans continue to remain below the 5% threshold, a level considered healthy by the Bank of Albania and indicating a steady improvement in lending quality.
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