Lending in sharp decline due to “cleaning” of lost loans: BoA
Lending in Albania has declined in the end of 2016 and in the first month of 2017.
According to data from the Bank of Albania, lending fell for two consecutive months during December and January, reaching a total value of 545.2 billion ALL, around 8 billion ALL less compared with November 2016.
Besides the relative weakness of new lending, the causes of the decline can be interpreted with specific seasonal factors.
The fall with nearly 6 billion ALL during December was mainly due to the cleansing of the potfolio from lost loans.
The regulation of Bank of Albania states that banks have to remove from their balance sheets loans classified as lost since more than three years.
Usually, this process is undertaken by banks in the last months of the year, especially in December.
Cleaning brought a fall in non-performing loans to 18.2%, but, on the other hand, a decline of the total loan portfolio.
Meanwhile, in January, the decline by 2.4 billion in lending is estimated to be in line with the seasonal trend of lending.
In the first months of the year, demand for loans is lower, especially among businesses.
Despite this, the annual performance-based lending results positive.
Compared with the same period a year ago, loan portfolio has marked a growth by about two billion.
The growth has relied mainly in lending to individuals, with a portfolio in an annual rise of around six billion ALL.
Lending is still in decline, with about 3.5 billion ALL less compared with January 2016.
Lending in this segment is estimated to be tighter, while the process of deleting lost loans is estimated to have a higher impact.
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