BoA: New credit was 7.5% less for the first quarter

In recent statements, the Bank of Albania is optimistic that lending to the economy is moving at higher rates this year.

Statistics show that from the beginning of the year to the end of March, the loan portfolio for the economy grew by about ALL 14 billion. Adjusted for the effect of the exchange rate and the release from the balance sheet, in the first quarter of this year the loan grew by 6% compared to the same period of the previous year. Looking at the progressive portfolio performance, the lending situation seems to be improving.

But if we compare the value of the new credit granted this year with the same period of the previous year, the figures do not convey the same optimism. For the first three months of the year, the banking system provided about ALL 50.2 billion, down by 7.6% compared to the first quarter of 2018. The fall of the new credit for the part denominated in foreign currency includes partly the effect of the ALL. By the end of March 2019, ALL strengthened by about 4% yearly against the euro.

Beyond the partial effect of the course, it is a fact that the new credit this year is declining. This indicates that credit portfolio growth is not explained much by the fact that this year they are lending more loans, but that the maturities and repayments of existing loans are slower. Generally speaking, the Albanian banking system has dominated short-term lending, in response to the demand for business for circulating assets. Still today about 30% of credit to the economy is of a maturity of up to one year.

This means that nearly a third of the portfolio needs to be refinanced annually, so that its value does not fall. But over the last few years, it has been noted that banks have increased lending with medium and long maturities, mainly related to investment purposes. At the end of March, short-term loans were down 9% year-on-year, while medium-term loans increased by 13% and long-term loans by 3%.

These data show that although this year is giving even less credit, at least lending is more sustainable in time.

SCAN

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