Kosovo’s loan growth decelerates in April

Kosovo’s loan growth decelerates in April
By Dimitar Koychev in Sofia May 25, 2017

The total value of gross loans and lease financing extended by Kosovan banks rose by 10.8% y/y to €2.33bn at end-April, slightly slowing down from a 10.9% y/y increase at end-March, central bank data showed on May 25. The total loan amount was equal to 36.3% of projected 2017 GDP.

In a staff report completed on February 24, the International Monetary Fund (IMF) said, “The banking sector remains in good health and has increased lending. Capital ratios are well above regulatory minima, with the system-wide capital adequacy ratio above 18%. Profitability remains high, as improvements in asset quality (the system’s aggregate [non-performing loan] NPL ratio is 4.8%, from 6.2% at end 2015), together with cost-cutting among banks, have more than compensated for lower interest rate spreads. In turn, these lower spreads and stronger domestic demand are helping to spur credit growth, which has accelerated from 3% to 10% over the last two years, led by lending to the household sector.”

Loans in euros to private non-financial corporations went up 9.8% y/y to €1.49bn at end-April, speeding up from a 9.7% y/y expansion a month earlier. Household loans in euros climbed 13.6% y/y to €826.5mn, decelerating from 14% y/y growth at end-March.

In monthly terms, the total loan stock increased 1.5% at end-April, after rising 2.5% at end-March. Corporate and household loans went up 1.5% m/m and 1.6% m/m at end-April, after climbing 2.7% m/m and 2% m/m respectively at end-March.

The total value of new loans was €106.9mn in April, down from €128.1mn in March.

Ten banks currently operate in Kosovo, of which eight are foreign-owned. The latest to enter the market was a branch of Turkey’s Ziraat Bankasi.