Large Businesses in Difficulty, Rise of Bad Credits

Large Businesses in Difficulty, Rise of Bad Credits

TIRANA, July 22

Businesses are doing their activities in a hard environment, because of the uncertainties that are coming from the politic developments in the country and the signals not really good about the economic growth referring to the expectations. For this reason, the paying capacity of the businesses has worsened in the second trimester of 2019, according to an observation by the Bank of Albania that has done with the commercial banks for the performance of lending conditions.

The commercial banks have responded that the businesses have reported a worsening of their balances and as a result of their solvencies too. This situation of the businesses has obliged commercial banks to tighten further their lending conditions. Private banks have reported that the conditions and general terms over new credits, distributed to businesses have tightened a little more than the previous Q1. The tightening of the conditions and terms of lending for the businesses was reached through the application of the margins somewhat higher over the bad credit. For this reason, the commercial banks have expressed that they have reduced the amount of the credit and have increased the conditions regarding the credit agreements for businesses.

Reading suggestion: Outsource to Overcome Business Growth Challenges

Businesses are involved in a pessimistic period, reflected even in the trust indicator. The politic crisis that is lasting for months and it seems it is not going to be resolved soon, on the contrary, is getting more complicated, has given a negative impact on the expectations of the businesses and consumers. Bank of Albania, has announced that the economic sentiment indicator, has fallen by 0.7 points during the second Q1 of 2019. Only the service sector because of the tourism was somewhat optimistic, but the sectors of industry, construction, trade, and consumers have increased the pessimistic level, and as a result, have overlooked the investment and consumption plans.

The commercial banks have reported that they have decreased by 15% the demand for an investment loan, while for those used to finance liquidity needs, the demand was higher. The biggest decrease in the demand for credit came from large businesses. On the other hand, the economy has severely shrunk the growth rates, growing only 2.2 % in the first trimester of 2019, compared to the same period of last year, has declared INSTAT. This is the slowest growth since the second Q1 of 2015 and almost half of the performance of 4% in 2018.

Source/ Monitor.al

Read also: Commercial Banks Profited Lek 8 Billion from January-May 2019

State Department on 2019 Investment Climate in Albania

BA: Trust of Businesses Increased by 2.8% in the Second Q1 of 2019


Leave a Reply

Your email address will not be published.