Bad loans increase slightly, BoA Report: There are 362 million euros of problem loans on banks' balance sheets

Loan installments are not being paid on time by citizens and businesses. After a continuous decline, May recorded a halt in the contraction of non-performing loans.

According to the Bank of Albania report, in May 4.12% of total loans granted were non-performing, up from 4% in April.

The increase in living costs, influenced by high prices, seems to be reducing the financial possibilities to repay the loans taken on time. Despite this slight increase compared to the same period last year, non-performing loans are decreasing by almost 1%.

PROBLEM LOAN

May 2024 4.81%

January 2025 4.12%

April 2025 4.03%

May 2025 4.12%

Translated into total value, the balance sheets of commercial banks in the country are 362 million euros of problem loans, a value that has increased this year, since in January there were only 346 million euros of bad loans. This increase in value is also affected by the increase in lending according to the central bank, since at the beginning of the year the total loan was 8.4 billion euros, while at the end of May it reached 8.8 billion euros.

Meanwhile, compared to May 2024, bad debt is down by 15 million euros, since in the same month last year, problem loans were estimated at 376 million euros. This reduction in these overdue loans compared to previous years was influenced by the reduction in interest rates, as a result of the reduction in the base rate by the Bank of Albania.

The reduction in interest rates has made installments cheaper, while the depreciation of currencies also has a positive impact on the repayment of loans taken out in foreign currency.

TOTAL CREDIT TO THE ECONOMY

January 2025 8.420 million euros

May 2025 8.805 million euros

Growth + 385 million euros

 

NON-PROBLEM LOAN VALUE

May 2024 376 million euros

January 2025 346 million euros

April 2025 351 million euros

May 2025 362 million euros