PRESS RELEASE
Governor Sejko presents the Annual Report of the Bank of Albania for 2018 to the Parliamentary Committee on Economy and Finance

Today, on 23 April 2019, the Governor of the Bank of Albania, Mr Gent Sejko, presented the Annual Report of the Bank of Albania for 2018 to the Parliamentary Committee on Economy and Finance. Reporting to the Parliament is the main instrument of accountability for the Bank of Albania as an independent institution.

During 2018, the work of the Bank of Albania focused on three main aspects: the objectives and duties set out in the legal and sublegal framework; the objectives set out in the Medium-term Development Strategy and the recommendations left by the Parliament, a year earlier. 

Initially, Governor Sejko presented an overview of the latest developments in the country highlighting that the Albanian economy and financial situation marked progress in all the three above-mentioned aspects. Economic activity and employment continued to expand, wages and domestic inflationary pressures trended upward, main banking sector’s soundness indicators improved, and a series of indicators of domestic and external economic balances strengthened - the Governor said.

The Bank of Albania, as the Monetary Authority in Albania, implemented an accommodative monetary policy, which boosted economic growth, contributed to the expansion of aggregate demand and contributed to the stability of the domestic currency. The Bank of Albania’s assessments suggest that the accommodative monetary policy stance has contributed positively, on average by 0.5 percentage point, to economic growth in the last two years.

Governor Sejko highlighted that inflation was driven by the appreciation of exchange rate, as a decelerating factor, and the build-up in domestic inflationary pressures. As a result of them, inflation resulted in 2% annual rate. Moreover, Governor Sejko presented the measures undertaken by the Bank of Albania during 2018, for containing the exchange rate appreciation pace, which jeopardised the achievement of the inflation target in the medium-term horizon. 

The Governor added that the activity of the banking sector during 2018 was stable and with good indicators of performance and financial resilience. The financial result was positive: Return on Assets (RoA) stood at 1.3% and the Return on Equity (RoE) reached 13%. Capitalisation and liquidity levels were above the respective regulatory requirements. Credit risk continues to represent the main risk to the activity of the banking sector, but the credit quality has improved from the previous year. At the end of 2018, the non-performing loans ratio was 11.1% from 13.2% a year earlier, whereas the outstanding non-performing loans reduced by 20% - the Governor said.

Governor Sejko focused also on some changes that took place in the ownership structure of the banking system. Following these changes, the number of banks operating in the Albanian banking sector reduced from 16 to 14 in 2018. The Bank of Albania deems that the consolidation of the banking system is a welcomed development, which will revitalise the banking activity, will enhance the banking efficiency and will bolster development and innovative policies with regard to credit and payments.

In the capacity of the Resolution Authority, in 2018, the Bank of Albania continued to work on the regulatory and procedural framework for resolution planning; it also established the Resolution Fund and prepared the procedures for monitoring its management by intensifying the cooperation with the Deposit Insurance Agency.

Beyond these key domains, the Bank of Albania has worked intensively for adopting best central banking practices and standards, marking significant progress on statistics; research; compliance with EU integration criteria, strengthening the governance; etc.

Concluding, Governor Sejko reassured that the Bank of Albania will continue to be committed to complying with its legal objectives.

On behalf of the Parliamentary Committee on Economy and Finance, Ms Evis Kushi spoke on the activity of the Bank of Albania during 2018, commending overall the work of the Bank of Albania for safeguarding the macroeconomic and financial stability in Albania. She also focused on the internal governance and the fulfilment of the institutional objectives in accordance with the last year’s Resolution of the Parliament. Ms Kushi underlined the challenges faced by the Bank of Albania, noting the recommendations of the Committee on Economy and Finance for the improvement of Bank of Albania’s activity and its increased contribution to support the Albanian economy.

At the end of the session, the Governor responded to the questions addressed by the Committee members on specific issues related to the activity of the central bank and the banking system.

• Governor Sejko address to the Committee