Bank profits concentrated in few hands: BoA report

Statistics published by the Bank of Albania at the end of February showed that the profits of the banking system in 2016 suffered a significant decline.

Based on the financial reporting standards for banking supervision, the banking system closed last year with a profit of ALL 9.3 billion, 41% less compared to 2015.

However, data released this week by the Association of Banks, which rely on individual banks reports according to international financial reporting standards, show that profits are lower.

According to unaudited data, the combined result of 16 banks of the system for 2016 was positive in the amount of less than ALL 1.3 billion, down by 73% compared with 2015.

Of the 16 banks in the system, 10 closed last year with profit, but, however, in absolute value, profits are concentrated in the largest bank in the country, National Commercial Bank BKT and, partially, in the fourth largest bank, Intesa Sanpaolo .

BKT closed 2016 with a profit of ALL 7.5 billion, while Intesa Sanpaolo announced a profit of ALL 2.3 billion.

BKT’s large profits are owed particularly to their large expansion in the market of government securities.

Thanks to the large deposit balances, BKT increased its profits, especially through investments which are low-risk, but that guarantee a large revenue base.

At the end of 2016, BKT possessed ALL 150 billion in investment in debt securities.

A similar explanation is given for the Intesa Sanpaolo profits, which in recent years has been very conservative in lending, but holds a large portfolio of investments in securities.

The other banks reported very low profits.

A positive result was reported by Credins, Societe Generale, American Investment Bank, Fibank and Union Bank.

Meanwhile, for some other banks, 2016 confirmed the challenges in managing problems carried over from the long years of crisis.

Raiffeisen Bank ended the year with a deep loss at ALL 4.5 billion, mostly because of bad loans in the corporate segment.

Huge losses were also suffered by Veneto Bank, at ALL 3.7 billion, and Alpha Bank, at ALL 1.4 billion, while Tirana Bank closed a second consecutive year at loss, at the value of ALL 520 million.

The decline of profits in the banking system for 2016 showed that non-performing loans still remain a problem with a serious impact on the profitability of the banking system, while another challenging factor was the reduction of interest rates.

SCAN

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