PRESS RELEASE
Questions and answers at the press conference on 16 December 2020

Question: How are expected to change the non-performing loans and is the Bank of Albania considering additional measures?

Governor: Despite the difficult situation, the non-performing loans ratio remains unchanged. Currently, this indicator is at 8.29%. The non-performing loans ratio would have been lower, if we were not hit by the earthquake and the pandemic, but the fact that this ratio has not increased is a very positive indicator for the financial system overall and mainly for the banking sector in Albania. Due to these shocks, this ratio might have been higher, considering the difficult situation created.

We have highlighted in our reports to the Albanian Assembly or commented in our previous statements that the non-performing loans ratio may increase in 2021, a phenomenon that is expected to happen in the banking systems of many other countries as well.

A positive element that has affected the stability of this indicator, and has also helped the banking sector, the financial system, households and enterprises, has been the measures taken by us, such as postponing loans instalments for 2 quarters as well as regulatory changes so as to allow banks to restructure loans.

I want to emphasize that based on our analyses, even in the worst case scenario, the banking sector remains stable and the increase of the non-performing loan ratio would not affect the performance of the capital adequacy ratio and liquidity in 2021 and in the future. However, the baseline scenario predicts stability and we do not forecast issues from an increase in the non-performing loans ratio. We have good experience from the past, we have a plan of measures for their treatment, which has been undertaken, has worked and has been consolidated. Of course we are constantly analysing the situation.

There is also a request from the Albanian Association of Banks about if we can postpone for another quarter, not the loans instalments, but the regulatory changes that allow banks to pro-actively restructure loans. This will be considered and decided very soon.

Question: What has been the performance of lending in this difficult year and how is it expected to be in the coming year?

Governor: I highlighted in the monetary policy statement as well that during 2020, despite that fact that it has been a difficult year, we have had an annual growth of lending at 6.7%. Lending has increased in both enterprises and households segments. The enterprises segment has had a more significant growth at 6.9%, while that of households stood at 6.4%. The important thing is that lending has continued even with a difficult economic situation influenced by the pandemic. The impact of the Albanian government’s packets, meaning the sovereign guarantees through which commercial banks have disbursed funds, is also included in the level of lending, but in addition to that we have also had higher lending from commercial banks.

This is a positive indicator that is beyond our forecasts. As we underlined in the statement, everything is related with the course of the pandemic. If we will have an improvement of the situation and a decrease of the number of diseased people, obviously the economy with increase again in 2021 and lending would expand more. We would have a more positive lending.

In the baseline scenario, again, we have forecasted an increase of lending. A very positive element that we also highlighted is the increase of lending in lek. This indicates the efficiency of the transmission of the monetary policy of the central bank and it will increase in time. It also avoids the foreign exchange risk during loans’ settlements, hence affects positively the financial stability of Albania.

Everything is to be seen, everything depends on the pandemic situation, on how the pandemic will evolve and how much it will affect the economy in 2021. However the current numbers are those that I just said.

Since this is the last conference of the year, I would like to wish all our partners, colleagues and viewers, Happy Holidays and Happy New Year.

Thank you, and I wish you good health and all the best!