Banks report higher profit, non-performing loans declined by 15.3%

The banking system further expanded its profits during July. According to data from the Albanian Association of Banks, for the first half of this year, the system realized a net profit of ALL 14 billion.

This profit is over three times higher compared to the same period a year ago.

It is believed that the downward trend of the non-performing loans ratio is one of the main factors favoring the improvement of the financial result of the banking system.

In July, non-performing loans dropped to 15.3% of the total, the lowest since April 2011.

The decline in non-performing loans decreases banks’ expenses for provisions, contributing to better financial results.

Consequently, the downward trend of this indicator is expected to positively affect the profitability of banks in the remainder of the year.

In addition to lowering provisions, other factors that have contributed to the increase of banks’ profits are the increase in revenues from other activities and especially from foreign exchange activity.

A higher performance is also reported by extraordinary income, mainly referring to the sale of collateral from lost loans.

While profit data at the system level are quite positive, it should be underlined that high earnings are concentrated in a few large banks, while for the remainder profitability remains a challenge or is at normal levels.

SCAN

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