TIRANA, July 21 /ATA/ The survey recently published by the Bank of Albania on lending activity in the country shows that borrowing for businesses has tightened during the second quarter of this year, while for the individuals segment it has loosened.
Thus, banks reported higher margins, mainly on risky loans, tightened the number of conditions in the loan agreements signed with businesses, increased commissions, reduced the principal loan amount extended to businesses, as well as set higher requirements for collateral in relation to the loan disbursed.
Also, the approval rate of loans for businesses was reported to be lower in the second quarter. Almost all factors were reported to have contributed to this decline. The income from the exercise of the activity, the perception of the banks on the risk for the financial situation and for the perspective of the sector where the businesses operate, as well as the status of the current loans had the highest impact on the rate of rejection of loans for businesses.
The tightening comes amid an increasing demand for business credit even in the second quarter. High demand for loans was reported in the segment of large businesses to cover liquidity needs. Meanwhile, the demand for loans from small and medium-sized businesses was lower.
Meanwhile, lending standards for individuals were eased in the second quarter of the year. The easing of standards was observed in both categories of the purpose of the loan, both in mortgages and consumer loans. The main factors that led to relaxation of lending standards for individuals were the increased pressure from competition in the banking system, as well as the banks’ perception of current and expected developments in the housing market. The main factor that influenced the tightening direction was the perception of risk on the solvency of the borrower.
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