AAB Chairman Pedrazzi: Address to the discussion meeting with senior banking sector officials

Publication date: 30.05.2019


Dear Governor,

Dear guests,

I would like to reiterate what the Governor noted also in his brief overview that the banking industry is fully aware of its responsibility for its own future and for the future of the country. The banking system is the backbone of any economy. In Albania, the banking sector plays a very important role and we are fully aware of our commitment and responsibility to develop both the banking sector and the economy of Albania.  We discussed about these topics also at the Third Conference of the Albanian Association of Banks, which marked also the 20th anniversary of its establishment. I can assure you that we are fully committed, both at the Association and at single bank level, to contributing to the effective implementation of all the plans that the Governor already mentioned and shared with us today.

Let me just remind to you that over the last five years, the banking sector has made tremendous and dramatic positive steps toward strengthening the system and rendering it ready to face challenges, in a world that, by definition, is getting more and more unstable. So, the first precondition in terms of sustainability of the banking business and the banking industry is the stability, the solidity, and the liquidity of the banking sector and the quality of its own assets.

I would like to also underline what the Governor said - the Bank of Albania always speaks the truth, facts and not opinions. The banking industry has reduced the level of NPLs dramatically, which is, again, one of the preconditions for our sustainability. The lending activity, contrary to certain opinions and claims, is growing with higher quality. In addition, there is a more structural approach from both banks and the borrowers. We must continue to preserve the quality of our assets and that does not mean at all for us to be too much conservative.

As I also said recently in another recent occasion, it should be clear to everybody that banks respond to the request and demand for loans from enterprises, from households; it is not the banks that come first; we have the will to accommodate as much as possible the loan demand from the real economy, always in compliance with the rules.

From this point of view, it seems to me evident that the banking sector provides a quite good response. The rejection rate is quite low, meaning also that the quality of demand is getting better and better. Having said that, no doubt that we must contribute more to finding new ways of lending. Under this point of view, I would like to stress the importance to contributing - through our lending - to all investments that create new jobs. On the other hand, I do not want to marginalise the possible impact of new foreign investments that is something very, very important. But, I think we really have to look inside the country and to make our customers, both households and enterprises, more confident in their investments. I believe more in small and medium sized investments that can be implemented quickly, creating jobs and triggering a positive chain reaction.

I am also quite confident that we will see improvement in various sectors and when talking about opportunities, I have in mind the sectors that the Governor already mentioned, like agriculture, tourism and start-ups, IT services. Of course, it requires the involvement also of the banking sector, our banks, our people - because banks are made out of people to take action. We have to make further efforts to train our people that are along the chain of services and products offered to the customer, from our branches up to the risk departments and other relevant units. We have to train the people and update them and show them that there are different and new possibilities and opportunities compared to the past.

In meetings we have at the Association, we pay special attention to the training of our people and we see that effective results have been achieved. So, we invite all the stakeholders in the country to think positively, to think beyond the short-term horizon. We have to be committed to our daily activity; on the other hand, we have to look also in the medium and long-term horizon, because the sustainability of the banking system requires daily efforts and daily changes. Why do I mention “changes”? Because, if it is true that, in the past, big improvements have been achieved, new challenges then will lie ahead of us.

The world is changing, Albania is changing. The banking system must change, and all the stakeholders must change and adapt their approach. The challenges are several, for example, the technological revolution. Under this point of view, we have to update our instruments, our facilities, in order to provide more services based on the new technology, eventually ending up in lower costs for the citizens. But in order to provide cheaper products to our customers, we have to make big investments. Again, this is a very important challenge for us. As I said before, the quality of the credit portfolio must be preserved, no doubt about that. We were lucky, not only in Albania but across Europe, that the new inflows of the NPLs in the last years were quite limited. And our profit and loss accounts were not affected, just like in the past, from additional credit provisioning. Yet, this situation cannot last forever. We have to take action now in order to pave the way for future positive developments.

Euroziaton is another topic that I would like to touch upon. The AAB recognizes that all the measures that could have been taken by the Bank of Albania, have been taken already and they have produced some positive effects, but this is not enough. The stance of the banking industry is always the same: let’s reduce informality, and let’s reduce dramatically cash circulation. It will be cheaper and safer also for the citizens. Let us find other solutions; some of them may not be within the remit of the jurisdiction of the banking sector or of the Bank of Albania. But, we have to keep on working on this, because the problem of too high euroization is a concrete issue of concern. We have to reduce the usage of foreign currency in our economy.

I will conclude saying that we are on the same page with the Bank of Albania. The cooperation between the banking industry and the Bank of Albania is a long lasting and quite positive one. This, believe me, shouldn’t be taken for granted. We have always found a cooperative approach on the side of the Bank of Albania, a very professional one. At the end of the day, we are always sharing the final outcome of every discussion.

I want to reconfirm the full commitment of the banking sector to contributing to the development of the economy also through the further credit growth. This is something that we need and something that we want. Let me reiterate once again that the banking sector is fully aware that, while we are profit-driven companies and we are private businesses after all, I want to underline 10 times that the banking industry has a specific role also in the social environment of any country. And, we are already playing this role in Albania.

Thank you!