Bad Loans Down to 15.58 Percent
Albanian Daily News
Published August 6, 2017
The Non-Performing Loans (NPLs) have seen another decline during June, for the eighth consecutive month, falling to 15.58 percent of the total, according to statistics published Friday by the Bank of Albania.
This is the lowest level reached since the first quarter of 2011, when the bad loans in the banks were at 14.41 percent. After this time, this indicator started to go up, to reach a record of almost 25 percent in the third quarter of 2014.
After the Bank of Albania undertook a strategy for the management of NPLs, they were reduced gradually, neutralizing the temporary growth evinced in the first half of 2015, as a result of the failure of Kurum company, which had an exposure of about Euro30 million in the Albanian banks.
During the last two years, the banks have implemented the process of writing off loans that are older than three years that have not been returned, while they continue to be pursued by the banks. The data of June show that the stock of the loans of non-financial corporations in foreign currency has fallen by Lek26 billion compared to June 2016.
In June, even in their absolute value, NPLs were reduced by Euro12 million according to statistics of BoA.
Another element which has influenced the reduction of NPLs is the process of restructuring of 35 big companies that owned about 60 percent of NPLs not long ago.
According to official data of BoA, 21 out of 35 companies were restructured.
From the 21 structured companies, 10 of them are no longer in retard, and they are no longer in the list of problematic enterprises. Whereas for 11 others, the process of restructuring has gone forward but a few more months are needed for them to be out of the bad list. From these 35 companies, 7 of them are in the bankruptcy process.
Albania, Serbia, and Montenegro were the most problematic countries in the region for the high level of NPLs, and this indicator was between 20-25 percent. These three states started a plan to reduce NPLs, mainly through restructuring. Montenegro is doing better in this regard. At the end of 2016, NPLs were down to 10.3 percent of the total, whereas in Serbia they were down to 16-17 percent.