Banking system reports ALL 4.8 billion in profits in Q1 as bad loans decline
The ratio of non-performing loans fell sharply in March. According to Bank of Albania data, non-performing loans dropped to 13.4% of the total, from 13.7% to February.
In the first quarter of this year, this indicator did not fluctuate significantly, standing in the range between 13% and 14%.
Although the level of non-performing loans is still high, the efforts of recent years have yielded good results and this indicator has dropped to the levels of 2011.
Experts estimate that this decrease was due to offsetting lost loans from balance sheets, as well as better use of restructuring, but also an improve in the quality of new loans and for a more efficient functioning of collateral enforcement procedures.
The reduction of non-performing loans is having a considerable impact on the financial results of the banking system.
According to official data from the Bank of Albania, the profit of the whole sector for the first quarter of the year was ALL 4.8 billion.
Compared to the first quarter of 2017, banks’ profits have fallen by about 16%.
Banks’ interest income is almost at the same level as in the first quarter of last year, while provisioning expenses have declined further, reflecting a qualitative improvement in the loan portfolio.
The decline in profits has come mainly due to losses from financial instruments, but this has been mostly related to the new financial reporting standards that came into effect earlier this year.
SCAN
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