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The level of nonperforming loans decreased slightly to 21% during October, says a report issued recently by the Albanian Association of Banks. In September, the level of nonperforming loans was 21.1%, according to the report. The main reasons that are affecting in the continuous decrease of nonperforming loans are the erase of nonperforming loans from private banks’ balances and the plan of measures applied by the Bank of Albania.
The banking system in Albania has been liquid and well capitalized during this year, according to monthly reports published by the Bank of Albania. During the period of January – August 2015, the general profit of 16 private banks that currently operate in Albania reached the value of ALL 11 billion. This is a record amount of profit by private banks in recent years. Experts say this has come as a result of the decrease of nonperforming loans which has reduced the expenses for provisions.
A further decrease of nonperforming loans remains one of the main challenges of banking system’s short term plans, say experts. The liberalization of the banking system and the increase of investments in this field after 2000, led Albanian businesses and individuals to take loans but the economic crisis that hit Europe in 2007, affected negatively in the Albanian economy and businesses struggled in paying their loan interests. The negative effects of the decisions made a decade ago are still present in the banking system, although figures speak of a revival and a drastic reduce of NPLs in the past years.
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