Albania's NPL ratio back up to mid-2015 level

Albania's NPL ratio back up to mid-2015 level
By Valentina Dimitrievska in Skopje September 7, 2016

The non-performing loan (NPL) ratio of Albanian commercial banks rose to 21.15% at the end of July, from 19.96% in the previous month, data from the country’s central bank indicated. 

Reducing the NPL ratio is one of the priorities of the Albanian central bank and the government. The high level of bad loans in the financial sector hampers lending and constrains the country's economic growth. 

The July 2016 level is the highest level since May 2015, when the ratio was 21.88%. This is only 0.06pp higher than in July 2015, but since then it has dropped to the lowest level in the last few years - 18.2% - at the end of 2015 before rising again. 

The return on assets (ROA) ratio on an annual basis was 0.56% at the end of July, down from 0.76% in June and from 1.29% a year earlier, data showed.

Interest margin to gross income fell to 80.69% at end July, from 81.13% a year earlier and was slightly up from 80.43% at end-June.

Sixteen banks operate in Albania.