Banks' income from commissions increases

2024-12-05 15:45:00, Ekonomi CNA

Banks' income from commissions is increasing for the fourth year in a row. Data from the Bank of Albania show that at the end of the 9th month of 2024, the income of the banking sector from commissions and fines reached the value of almost 14.2 billion lek or approximately 144 million euros.

The value of commission income increased by 12.6% compared to the previous year and reached the highest level ever recorded.

After suffering a decline during 2020, a decline mainly related to the pandemic and the restrictive measures taken by the institutions, from 2021 onwards the income from the commissions has recorded a continuous increase. This increase reflects the expansion of the use of banking channels by the public, but also partly an increasing trend in the value of commissions applied by banks.

Until the middle of 2024, Bank of Albania statistics show that individuals and businesses have made about 22.5 million payments through banking, an increase of 20.3% compared to the same period a year ago.

Meanwhile, the total value of transactions reached ALL 3.1 trillion, increasing by 7% in relation to the first 6 months of 2023. The smaller increase in the value of payments compared to the increase in the number of transactions is also partially related to the strengthening of lek in the exchange rate, which has shrunk the statistical value of transfers made in foreign currency.

In addition to payment transactions, other products are also having an impact on commission income, starting with loans, which generally bring commissions related to processing and disbursement.

Based on the Bank of Albania's payment statistics, during the first 6 months of 2024, banks made a total of 69,551 disbursements of new loans to individuals and businesses in the system. The number of loans disbursed has increased by 37% compared to the first half of last year.

The expansion of income from commissions is one of the factors that has contributed to the improvement of the financial result of the banking sector, although in the last two years the main effect has been given by the increase in interest rates.

According to the Bank of Albania, for the 9th month of 2024, the banks made a net profit in the amount of 27.9 billion lek, 22% more compared to the same period a year ago.

The Albanian banking sector has historically had interests as the main source of income. This is related to the fact that banks' business relies mainly on classic products, such as lending or financial debt instruments. However, in recent years there has been an attempt to diversify the revenue base, with efforts to expand the range of services.

Such examples are income from commissions for the sale of insurance products, from services related to securities trading for clients, from depository services for pension and investment funds, etc./ Monitor Magazine