TIRANA, Nov 15 /ATA/ The capitalization of the banking sector reached an all-time high at the end of the third quarter of this year”, announced the Bank of Albania.
The data of the Bank of Albania show that the capital adequacy indicator reached 19.26%, from 18.99% that had been a quarter ago and 18.3% that had been in the same period last year.
The capital adequacy indicator is calculated dividing the regulatory capital of the banking sector by its risk- weighted assets. The increase in this ratio during the third quarter has happened because regulatory capital has grown at a higher rate than the value of assets at risk, specifically 3% against 1.6%.
“The macro-prudential capital buffers are aimed at improving banks’ resilience against cyclical and structural systemic risks. For this purpose, banks build up capital reserves to absorb possible losses, and these reserves create space for supporting the real economy with financing in times of stress”, emphasizes the BoA.
Although the basic ratio of capital adequacy for Albanian banks is 12% (50% higher than the ratio applied in the European Union), by including the macro-prudential buffers, the final levels required are much higher.
From 12%, which is the minimum capital adequacy ratio, with the capital conservation buffer of 1.5%, this ratio has reached 13.5%, while from January 1, 2023, it will reach 14%. The conservation buffer will continue to increase by 0.5% each year until 2024.
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