Lending to economy went down to 38.5% of GDP, the lowest level in a decade

Lending to the Albanian economy, in real terms, has reached the lowest level in the last decade.

According to data from the Bank of Albania, the loan portfolio amounted last year to less than 38.5% of the GDP, declining by two percentage points compared to 2016.

Improving economic growth on the one hand and lending stagnation on the other have caused this indicator to fall from 2012 onwards, with the exception of a slight increase in 2014.

In absolute terms, lending to the domestic economy, excluding that for non-residents, has stalled close to the level of ALL 530 billion for three consecutive years.

The decline is due in particular to the significant contraction of business loans.

Due to the failing of many important corporations and the growth of non-performing loans, lending to business, especially to large companies, have suffered a kind of cramp in recent years.

Banks continue to be very cautious in taking over large exposures.

This behavior is also evident in the structure of the loan portfolio.

Loans to business have fallen to 68.4% of the total lending to the economy.

Compared to two years ago, credit has fallen by over two percentage points.

In parallel, the share of lending to households grew by the end of 2017 to 32.4% of the total, from 29.5% in the previous two years.

Lending in this segment has fewer risks, because exposures are on average lower.

This is the main reason why banks are increasingly expanding to the segment of individuals.

The total loan for resident individuals is ALL 171.5 billion and about 62% of this amount covers properties.

SCAN

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