Banking System’s Developments – Statistics Q3 2013
AAB publishes on its website the unaudited financial reports of commercial banks for the third quarter 2013 and aggregated data for the System as of September 2013. According to these data, the Albanian banking system remains well capitalized, stable and liquid, while the financial results show decrease.
The assets of the banking system increased during the quarter with about ALL 31 million or 2.6 per cent, reaching ALL 1,235 billion at the end of September, with an annual increase of 4.7 per cent.
Deposits continued to grow, although at a much slower rate than in the previous year. Thus, at the end of September 2013, total deposits amounted to ALL 1,027 billion and recorded an annual growth of 3.3 per cent, compared to 10.6 per cent in September 2012. Unlike last year, this increase is almost entirely due to the growth in business’ deposits, in response to the economic activity.
Outstanding loans to the private sector present a decrease in this quarter, both for individuals and businesses. This is a reflection of a larger level of repayments of loans compared to the new disbursed loans during the quarter.
Nevertheless, banks continued to finance the private sector with a total of ALL 55.3 billion during the third quarter. Main borrowers have been the businesses, making up for 83 per cent of the new disbursed loans, around 70 per cent of which was used to cover short-term liquidity funding needs. Meanwhile, the new credit granted to individuals was used almost equally among real estate and consumer financing.
The main factors that have influenced the shrinkage of lending have been the lower demand for loans, both by households and by businesses, as well as the tighter lending conditions by banks, due also to the increase of non-performing loans.
Non-performing loans (NPLs) continued to grow during the third quarter 2013, reaching 24.2 per cent of total loans at the end of September. Referring to a recent study of the International Monetary Fund1, Albania ranks first among the countries of Central, Eastern and South-eastern Europe, with the highest level of NPLs, followed by Romania with 20.3 per cent. Despite the difficulties of comparison, due to methodological differences between the countries in the compilation of this indicator, Albania remains one of the countries with the highest annual growth of this indicator over the past few years.
Meanwhile, the banking system remains well capitalized: the capital adequacy ratio reached at 17.8 per cent in September, significantly higher than the 15.9 per cent at the end of September 2012 or 16.2 per cent at the end of 2012.
Source: Albanian Association of Banks