The gross non-performing loan (NPL) ratio of Albanian commercial banks rose slightly in monthly terms in January, defying the long-term downward trend with a 0.22 of a percentage point increase. 

Previously, the NPL rate had been constantly reducing, and it is now 10 percentage points lower compared to its peak in 2014, despite an uptick in 2016 that saw the rate rebound as high as 21.44% in August that year before falling again since then.

Despite the increase compared to end-December, the 13.45% NPL ratio recorded at end-January was well below the 18.23% a year earlier, data from the country’s central bank indicated.

The central bank intends to cut the bad loans ratio further via its plan to fight against the informal economy. The national plan for the reduction of NPLs envisages the establishment of regulatory criterion according to which lending will depend on tax declarations starting from 2018.

The return on assets (ROA) ratio (on an annual basis), which shows banks’ profitability in relation to their overall resources, was 0.53% at the end of January, down from 1.4% a year earlier. It stood at 1.54% at the end of the previous month.

The interest margin to gross income increased to 123.95% at end January, from 113.8% in the same month of 2017.

Albanian commercial banks' loan portfolios grew by 1% y/y to ALL550.8bn (€4.2bn) at the end of January, accelerating from a 0.5% y/y increase in the previous month.