Non-performing loans, Bank of Albania: There was a slight increase in March
According to the latest data from the Bank of Albania, the non-performing loan ratio in March reached 3.85%, up from 3.8% a month earlier. But on an annual basis, this indicator is declining. The non-performing loan ratio remains near its lowest levels in the last 18 years.
In absolute terms, non-performing loans have reached the value of 36.9 billion lek, an increase of 6% compared to the previous year.
In the first months of this year, the performance of the non-performing loans ratio has been volatile, showing trends similar to last year.
Since last year, the Bank of Albania has expressed concern about the risks of rapid credit growth, especially in the real estate financing segment. To this end, starting last year, several prudential preventive measures have been applied, such as increasing capital requirements for banks and imposing restrictions on risk management parameters for borrowers in home loan products.
In the second half of last year, the measures did not significantly slow down the pace of lending for home purchases. However, rapid credit growth and inflationary risks are likely to push banks towards a more cautious approach in 2026.
Despite a slight slowdown, credit to the economy continues to follow a double-digit growth even in the first months of this year.
Total credit to the economy at the end of March reached 958.5 billion lek, with a further expansion of 11.7 billion lek compared to February. Credit is growing at an annual rate of 10.6% compared to March last year.
For the moment, the cost of risk remains controlled and without worrying growth, but nevertheless the first quarter of this year showed an increase in provisions (reserve funds) for losses from bad loans.
Provisions for bad loans reached 1.58 billion lek, up 70% compared to the first quarter of last year. The sector's net profit, measured according to the Bank of Albania's supervisory standards, also declined, influenced, among other things, by the increase in provisions.
For the quarter, the banking sector earned 6.9 billion lek, 18% less compared to the first quarter of last year.
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