PRESS RELEASE
Bank of Albania's Governor, Mr. Shëlqim Cani's lecture at the Economic Faculty of the University ''Fan Noli'' in Korça

This morning the Bank of Albania's Guvernor, Mr. Shëlqim Cani held a special lecture with students from the Economic Faculty of the University "Fan Noli" in Korça. The main topics discussed during this lecture were central banking and the banking system in Albania.

Initially, Mr. Cani theoretically explained the banking system focusing on the central bank's basic functions as well as those of a universal commercial bank.

Later on Mr. Cani outlined some major developments in the banking system throughout these past seven years:
The macro economic stability and the reforms in the financial sector have been improved during the post-pyramid scheme period of 1996 - 1997. These improvements are related to the privatisation of certain state owned banks and new private banks entering in the Albanian banking market, which have influenced the financial intercession as well as the betterment of the banking services. Another characteristic worth mentioning is the increased number of the private banks, where currently there are as much as 16 of them.

During 1997 another bank was licensed of entirely foreign capital, under the name of International Commercial Bank. Meanwhile, during the 1998 another bank got the licence, the American Bank of Albania and the Alpha Credit Bank, Tirana's branch. In 1999, three other banks started operating in Albania, respectively the First Investment Bank, Commercial Bank of Greece, and ProCredit Bank (Fefad). Meanwhile, during the 2002, the Albanian Bank of Credit was licensed, too. Credins Bank and the Popular Bank were both licensed in 2003. Currently, Albania has 5.3 banks per 1 million habitants, Bulgaria has almost the same indicator, and Romania has 1.5 banks per one million habitants, while Hungary and Croatia have respectively 3 and 10 banks per habitant.

The banking activity has been developing together with the rising number of banks in the market, consequently increasing the number of the saving accounts. By the end of 2003, the system's activity resulted in 373.6 billion lekë or 50% of the GDP. On the other hand, the number of saving accounts has continually increased from 178.2 billion lekë during 1998 to 323.2 billion lekë in 2003.

The level of the financial intercession has been going up reflecting thus a positive attitude of the main developments in the banking sector. The deposits and the GDP ratio, which is the main indicator of developments in the financial intercession, has been increasing especially after the 1998, thus indicating a level of 43% during 2003. The same attitude has been noticed in the ration between the time deposits and the GDP, which is the most significant indicator of the intercession. This ratio increased notably from 12,8% during 1994, to 29.3% in 1998 and 35.3% during the 2003.

Another characteristic of these positive developments in the banking sector is the improvement of the credit market. There are two main attitudes that are to be noticed in this market: firstly, the continuous increase of crediting in the private sector and secondly, the decrease of bad loans towards the total of credits.
The crediting activity of the banking system increased with 30.5 % in 2003. Even though this activity constitutes only 13.5 % of the total of the system's activities, the ratio increased with 27.9% if we are to exclude the Savings Bank. This is a good support in increasing crediting further, bearing always in mind the impacts of the privatisation of the Savings Bank.

The banking market during the 2003 was characterised by important developments; the most important and with major effects on the banking system of them all, being the privatisation of the Savings Bank by a well known bank such as the Raiffeisen BAnk. During this year, two banks that started to operate on domestic capital.
The financial situation of the banking system during the last few years has been satisfactory. The Albanian banking system has been continuously resulting with profits, guaranteeing thus its liquidity, as well as fulfilling the crediting needs of the economy.

Revenues, expenditures and the financial results (in billion lekë).

The good conditions of the banking system are reflected even in the profitability indexes, which mounted during the 2003. The crediting index (the bad loans and surplus loans ratio) was estimated to be 4.6% by the end of 2003 from 5.6% it was one year earlier. The improvement of this ratio shows the considerate performance of the banks regarding credit allocation, reducing thus risks in the Albanian economy.

Credit portfolio indexes (in percentage towards the clasified credits).