TIRANA, Aug 10 /ATA/- Non-performing loans declined at the end of June, dropping to 8.1%, the lowest level in 11 years since the first quarter of 2009.
According to the data of the Bank of Albania, this indicator marked a decrease of 0.04% compared to May 2020 which saw non-performing loans record 8.14%.
Increased lending to economy has also had a positive impact on reduction of the indicator. The loan portfolio marked an average increase of over 7% during the second quarter, driven by the expansion of business loans and lek-denominated loans.
This is the lowest level since the beginning of 2009. In September 2014, the stock of non-performing loan (NPL) of second-level banks in the country peaked at 25% of gross loans. Albania suffered the consequences of the shock of the global financial crisis of 2007 and 2008. But after the start of the implementation of a strategy drafted by the Bank of Albania, the indicator decreased, falling to 8.4% at the end of 2019.
The Albanian government and the Central Bank of the country started in 2015 the implementation of a 12-item comprehensive action plan to reduce the stock and stem the expansion of NPLs. It included major legal changes regarding the structure of the bankruptcy, the execution of collateral, the quality of credit information, the treatment of large clients such as borrowing corporations in default, and the reduction of informality.
The non-performing loans ratio dropped to 8.1% in June, reflecting the concrete measures taken to reduce them, as well as the improvement of the economic environment and the financial situation of the borrowers. In parallel, the overall financial environment is favorable.
Financial markets appear calm, credit servicing costs are low, while exchange rate is stable, according to BoA.
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