Lending to non-residents amounts to 500 mln euro – Non-performing loans just at 3.3%

Lending to non-resident borrowers in Albania has gained considerable proportions in recent years.

According to data released from the Bank of Albania, the share of loans given to non-resident entities rose to 11.3% of the credit surplus in December 2016, from 9.2% that it was the previous year.

In absolute terms, the credit surplus for non-residents amounted to ALL 67.8 billion or about 500 million euros.

The main contribution to this growth was reported by loans given to business entities, which constitutes about 86% of all loans to non-residents.

In general, lending to non-residents is oriented in the longer maturity terms in both the medium and long terms.

Despite the rapid growth of lending to non-residents in the last three years, for the moment, qualitative indicators of this portfolio do not represent a major concern.

The NPL ratio in this segment is quite low, at 3.3% and even dropping from the level of 4.7% in 2015.

However, lending in large proportions to non-residents started after 2014.

Since this is a relatively new credit and a growing portfolio, its quality remains to be tested later in time.

According to the Bank of Albania, lending to non-residents contains some specifics related to the banks’ ability to appropriately assess the risks of borrowers operating in a foreign jurisdiction.

Therefore, evaluating the quality of this segment of the loan needs special attention and continuous monitoring.

In fact, lending to non-residents is mainly concentrated in a few large banks, which in recent years have sought alternative sources of financing in the region, given the weak demand and problems specific to business lending in Albania.

SCAN

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