TIRANA, Oct 11 /ATA/ The next stress tests conducted by the Bank of Albania have shown that the banking sector remains well capitalized against macroeconomic shocks, but certain banks may need a capital injection until 2024.
“Resilience test exercises or stress tests aim to assess the banking sector’s resilience to shocks from the real economy. The capital adequacy resilience test shows the degree of resilience of individual banks in terms of capital and aims to demonstrate its ability to withstand potential shocks to economic growth, credit, exchange rates and interest rates. The exercise contains three scenarios, the basic, moderate and aggravated ones, while the exercise period spans the next three years,” the BoA says.
According to BoA, under the base scenario, the capital adequacy ratio of the banking sector is 19.1% at the end of 2022, while it drops to 18% at the end of 2023.
The base scenario assumes a positive economic growth rate for the exercise period, at around 4%. In this scenario, economic growth is accompanied by a significant increase in lending and an improvement in the quality of the loan portfolio.
Under the moderate scenario, the Capital Adequacy Ratio for the banking sector drops to the level of 18.5% at the end of 2022.
While in the aggravated scenario, the banking sector remains capitalized for 2022 and 2023, with a Capital Adequacy Ratio of 17.8% and 14.7%, respectively. /j.p/sm/
