Albanian central bank’s governor, Gent Sejko, urged commercial banks on March 3 to increase lending to people and economy, the central bank said in a statement.
Albania's commercial banks' loan portfolios declined by 2.7% y/y to ALL542.8bn (€3.9bn) at the end of January, accelerating from a 2.4% y/y decrease a month earlier.
However, Sejko said that the growth of loans to the economy in 2016 is expected to be stronger than last year.
"The time has come to return to traditional commercial bank business, lending to the economy. This is the mission of commercial banks and for this reason, I invite you to accomplish it successfully," Sejko was quoted as saying in the statement as he met representatives of the business and banking community.
Sejko also asked businesspeople to be more professional in the implementation of projects that require credit support.
“Businesses should pay attention to proper financial and legal assistance, before, during and after the signing of contracts and adopt a modern management strategy,” Sejko said.
He mentioned that the high level of non-performing loans (NPLs) in Albania is a problem that has persisted for a period of five to seven years, but for the first time, thanks to coordinated efforts between all institutions, a significant decline in the level of bad loans was recorded in 2015.
The NPL ratio of Albanian commercial banks fell to 17.7% at the end of December 2015, from 22.8% a year earlier.
The bad loan ratio was reduced significantly mainly due to the write off of ALL11bn worth of bad loans from banks’ balance sheets in H1 2015.
Sejko noted that Albanian economy has entered the phase of recovery with an acceleration of economic activity beyond expectations in H2 of 2015.
"Based on current trends, the acceleration of economic growth will continue in 2016," Sejko added.
Albania expects economic growth of 3.4% in 2016.
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