PRESS RELEASE
Decisions by the Supervisory Council, 2 April 2025

In the meeting of 2April 2025, the Supervisory Council of the Bank of Albania reviewed and decided to:

• Approve the Financial Stability Statement and Report, 2024 H2

The Financial Stability Report is an important periodic document prepared by the Bank of Albania whose main purpose is to identify and assess risks to the financial system and its infrastructure. The Financial Stability Statement, whose half-yearly release is a legal requirement set out in the Law “On the Bank of Albania”, prefaces the Financial Stability Report for the relevant period.

The Bank of Albania assesses that the sector carried out its activity in a sustainable manner. Deposits and loans expanded, despite the dampening effect of exchange rate appreciation; the capitalisation of the activity remained at good levels; while profit improved considerably. Risks to the activity are assessed at contained levels and overall, banking system appears resilient to withstand them. However, challenges to banking and financial activity are estimated to edging up, for banks should make use of their better financial performance in improving the infrastructure of risk management.

Economic developments during the period were positive, driven by the good performance in consumption and investments, as well as the sharp performing tourism sector.  Economic growth was accompanied by a reduction in the unemployment rate and an increase in both employment and wages. Fiscal policy maintained a consolidating trend over the most part of the year given the considerable growth in fiscal revenues. Inflationary pressures have been declining, driving the Bank of Albania to ease its monetary policy. Risk to the economic and financial developments in Albania remain present and are mainly related to the uncertainty and the impact of international developments pass through. Against this backdrop, it remains important that the economic and financial policies of public authorities, as well as the actions of market participants, aim to preserve financial reserves that support the smooth functioning of their activity.

Also, the Supervisory Council approved the half-yearly report on meeting the minimum requirement for regulatory capital instruments and eligible liabilities (MREL) by banking sector, an important parameter in resolution process. As at end of 2024, all banks, subject to this requirement, met the intermediate target level of MREL, equal to 18.2%. MREL capacity was set to 22.9%.  Common Equity Tier 1 instruments dominate its structure. The final target of MREL is foreseen to be met by 2027, at 24.9%.

The Supervisory Council was also informed on the daily functional and operational activities of the Bank of Albania.