PRESS RELEASE
Speech of the AAB Chairman Mr Christian Canacaris, at the Banks

Honorable Governor Sejko;

Dear representatives of the business community;

Dear Directors and representatives of the banks;

Ladies and Gentlemen:

Overall, 2015 was a challenging year, both from a global and from an Albanian perspective.
In the European context, although economic recovery is continuing, it was quite sluggish and with slower pace during 2015. In fact, the euro-zone GDP in the final quarter of 2015 was still below its pre-crisis peak of early 2008.

In terms of economic growth for Albania, year 2015 did not fully meet our optimistic expectations, and that was also reflected by a lower growth of lending to the private sector from the banking sector.

The Region and Europe had to deal during the year with the threats coming from the Greek credit default, which had its psychological effects in Albania.

Nevertheless, the Albanian banking sector remained unaffected.
On the other side, the banks with European origin had to deal with more regulatory requirements and further restricting policies in the EU towards banks in Europe and their branches in other countries.

In addition, this year we went through many legislative and regulatory changes also in the local context, especially regarding the fiscal sector.
The nonperforming loans continued to be the main problem of banks, considering that we were strongly engaged to follow up and collect back the loans given out of the money of our customers.

Despite of all the above mentioned challenges, the banking system continued to expand its activity during 2015, as confirmed by the growth of its assets by 1.9%. The banks continued to be highly capitalized, with ample liquidity, and very safe, the testimony being the public trust through the increase of deposits.

Although at a slow pace, the credit portfolio has increased, and there has been continuously a consistent amount of new loans granted by the system to the Albanian economy. While looking at the simple figures, there are some elements that should be kept in consideration in order to properly assess the real lending growth.

First, the outstanding loans at the end of year 2015 should be corrected with the amount of more than 190 Million Euro of bad loans written off by banks during the year. Net of that effect the outstanding portfolio would show an increase of more than 2% throughout the year.

Second, it should be noted that the credit portfolio is characterized by short maturities, such as the overdraft credit lines. They have short repaying periods and are granted on a rollover basis, thus impacting a lower growth figure in the total portfolio, although these credit lines inject liquidity to the private sector.
Meanwhile, banks have decreased the lending interest rates, in response also the easing monetary policy of the Central Bank.

The start of year 2016 was not one of the best ones for the global economy, and made the outlook more uncertain, considering the turmoil in financial markets, the deceleration in the Chinese economy and the sharp decrease in oil and commodity prices.

Nevertheless, the expectations with regards to the Albanian economy are optimistic for year 2016. Both the international and local institutions expect a growth of around 3%, which gives hope for a positive outlook.

Banks have optimistic expectations and ambitious credit growth targets for year 2016, and remain committed to lend more, which is their main business.
For these targets to be achieved, the execution of collateral remains still an impending issue. The effective execution would bring better banking performance with regards to reducing the nonperforming loans. The decrease of this level down to 18.2% after constantly increasing over a seven-year period, came mainly due to the coordinated efforts by the banks and the implementation of the measures set by Bank of Albania. It was not the result of the debt collection as it should have been.

We remain optimistic for year 2016, considering the growth potential of the banking sector in particular and the entire Albanian Economy in general.
Thank you for your attention!