This is confirmed by the latest figures supplied by the Bank of Albania on this indicator, according to which, during the month of July 2017, the level of nonperforming loans amounted to 15% of the total of loans on a national level. A figure which has not been registered in the past 3-4 years, a period when banks have undergone restructuring and a plan has been drafted to increase the level of loan payments. These measures seem to have given their first effects, while from one month to another, bank experts are noticing growing figures of payments of loan installments and as a result, the reduction of the total nonperforming loans.
Let us recall that in the period from May to June of this year, nonperforming loans accounted for 16% of the total of loans that people and businesses that operate have been issued by banks. Meanwhile in the period March-April 2017, the indicator in question was 17% and before this, in the period January-February, they amounted to 18% of the total. This shows a progressive fall from one month to another of nonperforming loans and an increase of payments by borrowers for bank loans taken throughout the years.
35 biggest debtors under pressure, payments increased
The fact that the 35 biggest debtors in the country who have borrowed from commercial banks have been put under pressure for the payment of their big loans, seems to have yielded concrete results. This is drawn by the data supplied by the Bank of Albania in relation to the level of nonperforming loans. Let us recall that three years ago, 35 big companies in the country were responsible for over 60% of nonperforming loans in the country. This level has fallen, because more than half of these companies have come out of this list and a part of them are regularly paying their loans.
Experts: Agreements made with debtors have worked out
It seems that the agreements reached so far by commercial banks with debtors for the payment of outstanding loan have worked out. This is shown by the recent growing figures. According to bank experts, this has been a good way to at least recover a part of the money that up until yesterday was considered as lost, accepting that debtors pay a part of the debt. Meanwhile, the restructuring of nonperforming loans has also resulted to be a very efficient method. In other words, this includes cases when banks agree on extending the deadline for the payment of the loan by the debtor, even granting a reduction of the interest rate. This way, the debtor is offered facilities in the payment of the high loan installments, luring him into paying lower installments than before. This way, banks manage to recover the money from the debtors, although the amounts may be smaller for the moment, but stretching longer in time.
BoA: Banking sector is sustainable
The banking sector that operates in Albania has resulted sustainable, but at the same time, it has also been profitable in the first half of the year. This was confirmed by the central bank in its report on Stability. The report in question says that the domestic banking sector, but also the financial sector in general, appeared capable of coping with risks during its activity during the first half of the year. According to the Bank of Albania, in general, the performance of macro-economic indicators and developments in the general economic environment acted as a better support for the performance of the financial system. In other words, the sustainable economic situation in the country led to a sustainable financial system and to private companies to have positive financial results.
Payment of outstanding installments increased bank profits
The payment of outstanding installments for nonperforming loans by commercial banks’ customers has had an impact on the growth of the banks’ profits. Thus, referring to the data supplied by the Bank of Albania, the fact that the level of nonperforming loans has dropped to 15% in the first half of this year, has helped in the improvement of the financial result of the banking system, due to the significant reduction of expenses for provisions, the funds that the bank provides as reserve funds to make up for the negative effects of loan defaults. So, according to the Bank of Albania, for the first six months of the year, banks spent less than 1.4 billion lek for provisions, while last year, they had spent around three times more.
