Non-performing loans return to decline in June

2024-08-09 15:05:00, Ekonomi CNA

Non-performing loans return to decline in June

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Loans that do not return on time in banks, in relation to the total, have returned to the decline in June, after showing an upward trend in the previous two months.

According to the statistics of the Bank of Albania, the indicator "Non-performing loans (gross) to total loans" decreased to 4.7% in June, from 4.81% the previous month.

However, it remains above the historical low of 4.64%, which was reached in March 2024.

The increase in non-performing loans in April and May seems to be more related to the effect of the increase in interest rates in euros, according to Bank of Albania analyses.

The segment where the growth of problem loans has been observed is mainly the loan for the purchase of real estate in euros, especially in the segment of individuals.

For the Bank of Albania, an increase was expected, given the strong increase in interest rates for the European currency, until last year.

The European Central Bank increased the key interest rate at a rapid pace, reaching a historic record level of 4.5%, in the autumn of last year. This increase was transmitted to the interests of the financial markets and to the main benchmark indicator used for quoting loans with variable interest rates in euros, the Euribor.

At the end of September 2023, the Euribor reached the level of 4.23%, the highest in the last 15 years. The 12-month Euribor is the main benchmark indicator that is used to build loans with variable interest rates even by Albanian banks.

However, June brought a stabilization of this indicator. Meanwhile, according to the Bank of Albania, credit to the private sector continued to have a positive trend in the second quarter.

"The pace of credit growth has been increasing, registering a level of 14.6% in June. Credit expansion continues to be supported - to the greatest extent - by the rapid growth of the loan portfolio in ALL, reflecting the low level of interest rates.

Likewise, credit expansion continues to have a broad base, covering the needs of businesses and families, both for investment and for consumption and working capital.

At the same time, the loan portfolio continues to have a good quality, as evidenced by the low levels of the problem loan indicator", according to the latest statement of BSH./ Monitor magazine.