Risk of assets in decline for the first half of 2017: BoA

The banking system in Albania has taken on less risk in the first half of this year.

According to data from the Bank of Albania, total assets adjusted to respective risk coefficients decreased to All 842 billion at the end of June, down 5.6% from the beginning of the year.

The total of assets adjusted to risk coefficients is an indicator of the type of investment taken on by the banking system.

For example, investment in government bonds has no coefficient risk and does not add anything to the total of adjusted assets for the purposes of calculating capital adequacy.

On the other hand, credit has a higher impact on total of the assets because it has higher weighting coefficients.

Lending in lek is weighted with coefficient 1, which means that it is added to the nominal total value of assets.

While lending in foreign currency, for borrowers with income in lek, is weighted by a coefficient of 1.5, which means that it has a greater impact on the total adjusted growth of assets.

Another form of investment that is weighted with a high coefficient risk is investment abroad.

The decline in investments that technically carry less risk is a clear signal of care, largely linked to the electoral year.

In the first half of the year, economic agents and especially businesses have maintained their careful positions, reflecting a sluggish credit performance, which is also the main form of banking system risk assets.

SCAN

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