Credit cancellation – Banks “cleared” ALL 8.4 billion last year

The cancellation of lost loans has had a significant impact on reducing the ratio of non-performing loans to last year. Based on the data of the Bank of Albania, commercial banks have taken out of the balance sheets 8.4 billion ALL or about 68 million Euros for 2019. In the last five years, the total value of hidden loans has increased to 65 billion ALL or approximately 530 million Euros. In 2015, the Bank of Albania adopted a regulation that required banks to repay those loans that resulted in losses of more than three years. Starting in 2020, the time to repay lost loans will be shortened to one year, which is expected to have a further effect on increasing deletions and clearing banks’ portfolios.

Last year the ratio of non-performing loans fell to 8.4%, representing the lowest level in 11 years.

Credit remained the most convincing quality in the segment of individuals, which at the end of last year had a ratio of non-performing loans to 5%. For the most important segment, housing loans, the ratio was even lower, at 4.4%. With these figures, home loans remain the highest quality banking loan product.

The business segment is also improving, but the ratio of non-performing loans is twice as high, up 10.7% at the end of last year. But on the other hand, business credit also has a greater decline in the ratio of non-performing loans, especially due to the fact that most of the loans written off from the balance sheets are in this segment.

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