Albania's NPL ratio drops in November, pointing to stronger banking sector

Albania's non-performing loan (NPL) ratio dropped to 4.48% in November 2024, signaling improved stability in the banking sector and a stronger financial outlook for the country.

TIRANA, Jan 10, 2025 – Albania’s banking sector is on the rise, with the non-performing loan (NPL) ratio dropping to 4.48% in November 2024, down from 4.60% in October. This improvement indicates greater financial stability, with the overall loan portfolio remaining steady at approximately 812 billion leks during both months.

NPLs fell by 1 billion leks, or 2.7%, reaching an estimated 36.4 billion leks in November, down from 37.4 billion leks in October.

The data from Albania's central bank shows that the situation is much better than this time last year when the NPL ratio stood at 5.07%, a clear sign that the banking system is becoming more robust.

An analysis from “Scan Intel” reveals further positive trends, with key banking indicators improving. The ratio of net NPLs to provisions and regulatory capital decreased by 0.42 percentage points, while the ratio of NPLs to shareholders’ equity fell by 0.32 percentage points, showing a more controlled approach to bad debt.

In the longer term, the banking sector continues to improve. The ratio of net NPLs to provisions and regulatory capital has dropped from 5.96% to 5.01% since last year. Meanwhile, the ratio of NPLs to shareholders’ equity has fallen from 5.80% to 4.90%.

Experts attribute these positive developments to improved borrower repayment capacity and more cautious lending by banks, contributing to a more secure financial environment.