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Last year, Albania remained the most under-credited economy in the Western Balkans region. Comparative data from the World Bank show that at the end of last year the loan portfolio in Albania was 34% of the Gross Domestic Product (GDP).
Although credit in absolute value has continued to grow in recent years, it does not appear to have kept pace with the rapid economic recovery in the post-pandemic period. For this reason, the GDP ratio has fallen for the second year in a row in 2022, to 34%, from 36.6% that was a year ago.
The economy with the highest credit in the region is North Macedonia, with a portfolio of 55.7% of GDP, followed by Kosovo, with 52.4%, Montenegro, with 48.4%, Bosnia and Herzegovina, with 48.1% and Serbia , with 40.4% of GDP.
Albania is also among the countries with the lowest credit rate in Europe, leaving behind only a group of Eastern European countries, such as Romania, Moldova, Ukraine or Belarus.
Albania has had low levels of credit in relation to GDP throughout the post-communist period. A rapid growth of this ratio was registered especially during the period 2005-2011, which coincides with the expansion of the banking banking sector in the country.
In 2011, the ratio of credit to GDP reached the highest historical level of 41.2%. In the years that followed, this ratio suffered a steady decline, due to the non-performing loan crisis, which led to stagnation of lending for years and then the continuous cleaning of portfolios of bad loans.
The erasure of bad loans of the banking sector started on a significant scale in 2015, when the obligation imposed by the Bank of Albania to remove from the balance sheets loans classified as bad for more than three years came into force. According to the Bank of Albania, during the period January 2015 - June 2023, banks have written off about ALL 80 billion from their balance sheets.
The decline in the ratio of credit to GDP reached its peak in 2018, at the level of 33%. Then, in the 2019-2020 period, where the ratio returned to growth, driven by the revival of lending, but also the strong inhibition that the economy suffered in the pandemic year 2020. After 2021, this ratio appears again in decline, because lending has not kept dot rates of economic growth.
According to the Bank of Albania, at the end of August the loan portfolio for the economy reached the value of ALL 725 billion, with an annual increase of 1.9%. Since the second half of last year, credit growth has slowed significantly, even in absolute terms, due to the increase in interest rates, but also the negative statistical effect of the strengthening of the Lek on the exchange rate./ Monitor
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