It seems that Bank of Albania is celebrating its fruitful measures taken during the past year on reducing nonperforming loans and clearing the balances of second tier banks. According to official figures released by the Bank, nonperforming loans reduced by 2 points of percentage during the second quarter of this year, due to strong measures undertaken by Bank of Albania.
In 2014, the Bank compiled a package of measures for second tier banks to help them clear and improve their balances regarding the nonperforming loans which recorded the highest level in years. The situation aggravated due to the heavy Greek crisis which affected the Albanian economy and the capability of businesses and individuals to pay their loans. Starting from 2008, trade exchanges between Greece and Albania reduced tremendously, at a time when Greece was Albania’s most important trade partner. Following the deep crisis of Greece and other European countries, remittances decreased as well, and this caused negative effects in Albania’s economy.
As the Bank of Albania says, the plan of measures for nonperforming loans has resulted successful and this has encouraged banks to increased lending to businesses and individuals. According to a latest report, private banks increased their profits by 53% in the first semiannual of 2015, compared to the same period of 2014. A Bank’s report showed that by the end of June, nonperforming loans decreased to 20.3% in the second quarter of this year, from 22.7% that were in the first quarter.
With the aim to prevent the increase of nonperforming loans, Bank of Albania appeals to private banks to implement accurately the preliminary measures and reforms suggested by the Bank in order to reduce the level of bad loans and to increase lending. Official sources say Bank of Albania aims to reduce the amount of nonperforming loans below 20% by the end of this year.