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NPL ratio fell in August/ Hit 16-year low

2024-10-11 08:11:29, Ekonomi CNA

NPL ratio fell in August/ Hit 16-year low

Illustrative photo

The ratio of bad loans fell in August and touched the lowest level in the last 16 years.

According to the statistics of the Bank of Albania, this indicator decreased to 4.61%, from 4.72% that had been for July. The value recorded in August is the lowest since October 2008.

In general, during this year, the ratio of non-performing loans showed a stable performance, staying at levels similar to the end of last year. The month of August has brought an improvement and the best result for this year, falling slightly below the level of 4.64% of the month of March.

However, the fact that the ratio of non-performing loans has been more or less stable, despite the rapid growth of the loan portfolio, is an indication that the amount of non-performing loans is increasing in absolute terms.

At the end of August, the total loan portfolio for the economy reached the value of ALL 812 billion, with an annual increase of 12%. Above this value, the total number of problem loans is estimated at approximately 37.4 billion ALL, from around 35 billion ALL at the end of 2023.

Source: BSH

This shows that, in absolute terms, bad loans have increased by ALL 2.4 billion or approximately 6.8% since the beginning of the year.

The loan portfolio for the economy is growing at the fastest pace since 2008. In specific segments, such as real estate loans for businesses, growth has reached very high levels, with 55% on an annual basis.

The acceleration of credit growth and the expansion of exposure in the real estate market has raised the concern of the Bank of Albania. In the middle of this year, the Central Bank decided to apply for the first time a countercyclical addition to the capital adequacy ratio of the banking sector, with 0.25 percentage points.

Meanwhile, at the beginning of this month, the Bank of Albania warned that, if lending continues to expand at the rates of the last few months, the further increase of this rate at the end of 2024 has a high probability.

The application of a countercyclical capital supplement is provided for in the 2018 regulation "On macroprudential capital supplements. Such an addition is aimed at slowing down lending, in case the central bank estimates that it is growing at too fast a pace./ Monitor.al