Albanian Banks profit increases again, 114 million euro for September
The Albanian banking system closed the nine-month period with a profit of ALL 14.3 billion or EUR 114 million. According to the Bank of Albania, profit rose by nearly ALL 1.1 billion in September. However, profits are lower by 15% compared to last year’s record value. The banking system’s profitability marks a return on equity close to the 13% level, a satisfactory rate for the circumstances surrounding the financial system and the real economy. Return on equity has already reached more acceptable levels for investors, to 13.4%.
However, the results does not indicate the state of all banks in the market. For years, profits are quite concentrated on the two or three largest banks in the system. For other banks, profits, either in absolute value or return on invested capital are generally lower. Banks’ interest income is close to the previous year, while the most decisive factor in maintaining high returns this year is the decline in bad loans.
According to the Bank of Albania, at the end of September, the ratio of non-performing loans remained at 12.9% at the lowest level since 2010. Provisions for bad loans this year were positive, which means that the system recovered from existing provisions. During this year, the main effect of the decline in this indicator is restructurings and credit return, while last year the decline in non-performing loans was the result of the cancellation of lost loans.