Non-performing loan rate, close to 4.12%/ Loan portfolio quality remains good despite slight increase
The rate of non-performing loans remains close to historical lows, despite a slight fluctuation in recent months. According to data from the Bank of Albania, at the end of May 2025, this rate was recorded at 4.12%, up from 4.03% in April and 4.02% in March. Although this is a minimal increase, this indicator continues to remain significantly lower compared to the long-term average and very close to the historical low recorded in March 2008 (3.92%).
The gradual increase in net non-performing loans to capital indicates a slight increase in their financial impact on banks' balance sheets. In May, the ratio of net non-performing loans to regulatory capital reached 6.54%, up from 5.95% in April and 5.03% in March. However, this level still remains manageable and within the limits of sustainability for the banking system, especially in conditions where capital ratios remain high.
In fact, regulatory capital to total assets has further strengthened, standing at 9.97% at the end of May, from 9.87% in March, while return on assets and return on equity maintain stable levels. Interest income remains high, with the margin standing above 76%, while the sector continues to maintain a good liquidity position.
In broader terms, the stability of the non-performing loan ratio is a clear signal of the maturity of the banking system and the improvement of borrower behavior. Despite the challenges that may arise from the increase in financing costs or other macroeconomic factors, the overall balance remains positive. Maintaining this balance between credit growth and portfolio quality demonstrates efficient risk management and paves the way for further support for the real economy.
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