Individual non-performing loans drop to 7.6%

The ratio of non-performing loans for individuals dropped to 7.6% at the end of last year.

The Financial Stability Report, presented Thursday by the Bank of Albania, once again showed that individuals remain the healthiest segment in lending.

The ratio of non-performing loans among individuals dropped by nearly five percentage points over the previous year, considering that at the end of 2016 this ratio was 12.5%.

Also, non-performing loans to individuals remain significantly lower in relation to businesses.

Lending to individuals is more qualitative mainly because it is given at lower average values ​​and enables a better distribution of credit risk.

Also, the largest loan volumes for individuals go for housing purchases, where in most cases the collateral is the purchased property itself.

Since the house becomes a collateral, individuals have a greater predisposition to be correct in repaying the loan.

Non-performing loans to businesses remain at the level of 17%, though this case also shows noticeable improvements in 2017.

Over the past year, the ratio of non-performing loans to businesses fell by about seven percentage points.

A significant impact has again been to clear the portfolio from lost loans, especially in the last months of the year.

But what has been underlined by the Bank of Albania is a growing contribution from credit restructuring in reducing the ratio of non-performing loans.

SCAN

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