The non-performing loan ratio reaches its highest level since November last year

2025-11-11 07:39:22, Ekonomi CNA

The non-performing loan ratio increased for the third consecutive month in September. According to data from the Bank of Albania, this indicator reached 4.37%.

The non-performing loan indicator has reached its highest level since November last year.

On an annual basis, however, this ratio is still declining. A year ago, non-performing loans accounted for 4.58% of the portfolio.

The performance of the non-performing loans indicator is starting to justify concerns related to the very rapid growth of credit in the last two years.

At the end of September, the credit portfolio for the economy reached 901.6 billion lekë, up 10.9% year-on-year. The annual growth of the portfolio has slowed slightly compared to 2024, but nevertheless remains at double-digit rates and close to the highest levels in the last 16 years.

Meanwhile, the non-performing loan ratio has slowed its decline, and in the last quarter it is even showing a slight upward trend.

It can be estimated that the stock of non-performing loans is around 39.4 billion lek, up from 34.9 billion lek at the end of last year and 37.2 billion lek in the same period a year earlier. Since the beginning of this year, the stock of non-performing loans has increased by 12.8%.

The Financial Stability Report of the Bank of Albania showed that since the first half of this year, the banking sector has recorded more new non-performing loans than performing loans. The annual flow of new non-performing loans was 1.9% of regular loans, up from 1.7% and 1.8% a half-year and a year ago.

In the middle of this year, the application of several restrictive measures imposed by the Bank of Albania on risk management indicators related to lending for the purchase of housing also began.

The central bank prohibited banks from financing the purchase of housing at 100% and also set mandatory criteria for the loan installment to income ratio (while allowing, however, a 15% exemption margin from the above restrictions).

In the first quarter of application, restrictive measures have failed to curb the growth of home loans. Central Bank statistics show that in the third quarter of 2025, the banking sector granted a total of about 13.8 billion lek in new loans for the purchase of housing, with an increase of 16% compared to the same period last year.

However, it is expected that the restrictive measures will gradually bring about a slowdown in credit growth. The slowdown in portfolio growth, in conditions where bad loans are showing an increasing trend, is very likely to bring about a further increase in the ratio of problem loans./ Monitor.al