Lending to the economy, at sustainable levels - BoA: Business and individuals, positive activity performance
The Bank of Albania notes that lending to the economy has been stable, both for the business segment and for individuals. According to the Director of the Financial System Department at the Bank of Albania, Klodion Shehu, in general, the demand for credit from both individuals and businesses is expected to be stable, while financial markets have performed according to expectations.
We also look at specific sectors, such as the individual sector and the business sector. Businesses in general have had a positive performance of activity. According to the BoA survey, it results that they have operated with a profit and this shows that their situation to cope with potential debt is positive. Individuals continue to have a credit surplus of their financial position. They finance the activity of the banking sector through deposits, but also businesses. In general, the demand for credit from both individuals and businesses is expected to be stable. Financial markets have performed according to expectations.
According to Shehu, there has been an increase in prices in the real estate market, but the growth rate has decreased compared to a year ago. Overall, the situation in the banking sector has developed positively.
Banking sector activity expanded by 9.4% in annual terms. Generally supported by the growth of capital and deposits, which was directed towards lending and investments in securities. Credit increased by 13.5% in annual terms, with a positive contribution from both loans in lek and loans in foreign currency. Similarly, deposits also increased with a positive contribution from deposits in lek and foreign currency. The growth of deposits in annual terms was 9.1%.
Our analysis shows that these have improved, they have come under control. Specifically, the non-performing loan ratio fell to 3.8% at the end of the year and this is the lowest level in the last 15 years. Liquidity indicators remain at optimal levels. Market risk indicators, which are mainly related to the banking sector's exposure to exchange rate or interest rate risk, also remain at controlled levels and far from the maximum level set by the regulatory framework.
In general, banks also express various risks of their activities and in the latest survey they have emphasized international developments.
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