Albania Banks Register Spike in Bad Loans

Albania's central bank building

Compared with same period in 2010, non-performing loans increased by 33.5 per cent, from 13.5 per cent to 18 per cent of the total loan portfolio.

Meanwhile total bank assets increased by 12.9 per cent, from 961 billion lek (€6.8 billion euro) in August 2010, to 1.078 trillion lek (€7.64 billion) in August 2011.

Albanian banks weathered the global financial crisis in 2009 well, due to their low exposure to international markets. However, the aftershocks of the crisis in the local economy have slowed GDP growth rates, creating difficulties for local companies in repaying their loans.

From August 2010 until August 2011, retail deposit in Albanian banks grew by 16.62 per cent while corporate deposits grew by only 2.69 per cent, indicating a propensity among consumers to save, and accounting for weak demand for products and services in the local market.  

Albania enjoyed strong economic growth averaging at close to 6 per cent per year in the past decade, before the global economic downturn hit the local economy in 2009.

The IMF downgraded Albania's GDP growth forecast for 2011 last Wednesday from 3.4 per cent to 2.5 per cent, amid concerns about the impact of the euro debt crisis and sluggish demand for goods and services.