Download No of Banks

Round Table
16 September 2015
Albanian Association of Banks
Content
I. Banking growth and impact to the
economy
II. Lending
III.Profitability & Interest rates
IV.NPLs and recovery challenges
Albanian Association of Banks
Banking Sector – in the last decade
Steady growth ….
Indicator
No. of Banks
Total Assets (mio EUR)
Assets in % of GDP
Total Loans (mio EUR)
Lending in % of GDP
Total deposits (mio EUR)
Deposits in % of GDP
2004
16
3,375
57%
552
9%
2,975
48%
2005 2006 2007
17
17
17
4,051 5,072 6,100
60%
69%
76%
1,042 1,553 2,401
16%
22%
30%
3,570 4,151 4,949
51%
57%
62%
2008 2009 2010 2011
16
16
16
16
6,690 6,424 7,189 8,063
81%
75%
81%
85%
3,205 3,261 3,562 4,036
37%
39%
40%
43%
5,007 5,032 5,927 6,586
60%
59%
63%
70%
0.25
100%
Assets in % of GDP
90%
70%
0.15
60%
4
Contribution of the Financial Sector on GDP
growth
0.2
80%
2012 2013 2014
16
16
16
7,984 8,546 8,798
89%
91%
92%
4,157 4,042 4,232
43%
41%
42%
7,134 7,310 7,624
73%
74%
75%
3.5
Contribution of FS (left, in pp)
3
Real growth of GDP (right, in %)
2.5
2
50%
0.1
40%
1.5
30%
1
0.05
20%
0.5
10%
0
0%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
2010
2011
Albanian Association of Banks
2012
2013
2014
2015
…increased capital invested
19.0
Indicator
Shareholders' equity
in (mio EUR)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014 15-Jun
160
203
266
343
433
577
615
671
700
730
737
792
Capital adequacy (%)
21.6
19
16.2
17.1
17.2
16.2
15.4
15.6
16.2
18
16.8
16
Compared to the region:
25.00
CAR
18.5
20.00
18.0
15.00
17.5
17.0
10.00
16.5
5.00
16.0
15.5
0.00
Albania
Western Balkan Countries
Central Eastern Europe
15.0
14.5
14.0
2011
2012
2013
2014
Albanian Association of Banks
CAR 2014
…continuous infrastructure improvement
Indicator
No. of Bank Outlets
Number of employees
No of Banks - internet banking
No of Banks - mobile banking
2006
292
4,263
1
900
2007
392
5,206
4
7,000
800
6,000
700
5,000
600
2008
517
6,332
6
2009
533
6,384
10
2010
559
6,430
11
2011
552
6,710
11
2012
556
6,820
11
5
2013
546
6,709
11
7
2014
526
6,825
12
8
900,000
90,000
800,000
80,000
700,000
70,000
600,000
60,000
500
4,000
500,000
50,000
400
3,000
400,000
40,000
300,000
30,000
200,000
20,000
100,000
10,000
300
2,000
200
1,000
100
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
ATMs 335 433 642 741 771 805 823 822 811
POSes 1,183 1,776 2,953 4,370 4,903 5,126 5,307 5,668 6,540
0
-
2006 2007 2008 2009 2010 2011 2012 2013 2014
Debit Cards 229,021 427,430 482,072 543,141 667,548 693,958 719,802 741,128 777,195
Credit Cards 9,754 10,439 15,246 22,793 27,300 37,893 49,173 64,432 84,824
Albanian Association of Banks
0
Lending in recent years
4,500
50%
4,000
45%
3,500
40%
35%
3,000
30%
2,500
25%
2,000
20%
1,500
15%
1,000
10%
500
5%
0
0%
2004
2005
2006
2007
2008
Total Loans (mio EUR)
2009
2010
2011
2012
2013
2014
Lending in % of GDP
160
Credit to Private Sector (Index, December 2007 = 100)
150
140
130
120
110
Albania
Western Balkan Countries
Central Easter Europe
100
90
80
12/2007
12/2008
12/2009
12/2010
Albanian Association of Banks
12/2011
12/2012
12/2013
12/2014
…compared to the region
Total Loans (in BN EURO)
& Annual Change (In %)
Greece
Romania
Bulgaria
Serbia
Bosnia &
Herzegovina
Albania
Macedonia, FYR
Kosovo
Montenegro
2008
2009
2010
2011
2012
2013
2014
198.0
∆
54.0
∆
24.7
∆
13.3
∆
7.4
∆
3.2
∆
2.7
∆
1.2
∆
0.9
∆
190.5
-3.8%
47.5
-12.2%
25.6
3.6%
13.4
0.6%
7.2
-3.2%
3.4
5.3%
2.8
3.4%
1.3
8.9%
0.7
-30.2%
251.3
32.0%
50.1
5.5%
25.9
1.2%
15.5
15.8%
7.4
3.5%
3.6
5.3%
3.0
7.0%
1.5
13.2%
0.5
-26.2%
241.9
-3.7%
53.1
6.1%
26.7
3.2%
16.8
8.4%
7.8
5.3%
4.0
12.5%
3.3
8.5%
1.7
16.4%
0.3
-30.1%
221.8
-8.3%
51.2
-3.6%
27.5
2.9%
16.7
-0.7%
8.2
4.1%
4.2
3.0%
3.5
6.8%
1.8
3.8%
0.3
-12.2%
212.4
-4.3%
49.8
-2.7%
27.5
0.0%
16.0
-4.2%
8.4
3.0%
4.0
-2.7%
3.7
6.3%
1.8
2.4%
0.4
22.9%
206.8
-2.6%
48.0
-3.7%
25.3
-8.2%
16.0
-0.1%
8.6
2.9%
4.3
5.2%
4.1
9.9%
1.9
4.2%
0.3
-12.6%
Albanian Association of Banks
New loans & Recovery in 2015
2,500
In Mio Euro
2,000
1,500
1,000
500
2008
2009
2010
New Loans to Businesses
2011
2012
2013
2014
2015H1
New Loans to Individuals
Outstanding loans for year 2015
corrected with the amount of
about 80 Mio Euro of bad loans
written off by banks from
January – June 2015
4,360
9%
4,340
8%
4,320
7%
4,300
6%
4,280
5%
4,260
4%
4,240
3%
4,220
2%
4,200
1%
4,180
0%
Jan-15
Feb-15
Mar-15
Apr-15
Outstanding Loans (mio Euro)
Albanian Association of Banks
May-15
Jun-15
Annual Change (%)
Profitability
12.0
ROE (in %)
ROA ( in %)
Albanian Eurobond Coupon Rate
10.0
8.0
6.0
4.0
2.0
0.0
2009
2010
90
2011
2012
2013
2014
Interest Income (% to total Income)
80
70
60
50
40
30
Albania
20
2008
Macedonia, FYR
2009
2010
Serbia
2011
Bosnia & Hecergovina
2012
2013
Albanian Association of Banks
2014
Kosovo
Q2 2015
Lending interest rates-regional comparison
15.0
16.0
Lending interest rates
14.0
Lending interest rates - 2014
14.0
13.0
12.0
12.0
10.0
11.0
10.0
8.0
9.0
6.0
8.0
4.0
Albania
Western Balkan Countries
Central Eastern Europe
7.0
6.0
2.0
-
5.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
14.0
Interest rate spread (%)
12.0
10.0
Average lending interest
rate, and spread between
loans and deposits rates
in domestic currency, as
reported by IMF
8.0
6.0
4.0
2.0
-
2004
Kosovo
Serbia
Albania
2005
2006
2007
2008
2009
Macedonia, FYR
Croatia
2010
2011
2012
2013
2014
Montenegro
Bosnia and Herzegovina
Albanian Association of Banks
NPLs – a regional issue
NPL in % of total
loans
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Albania
4.2
2.3
3.1
3.4
6.6
10.5
14.0
18.8
22.5
23.5
22.8
Bosnia and
Herzegovina
6.1
5.3
4.0
3.0
3.1
5.9
11.4
11.8
13.5
15.1
14.0
Croatia
7.5
6.2
5.2
4.8
4.9
7.7
11.1
12.3
13.8
15.4
16.7
Kosovo
..
..
..
..
..
..
5.8
5.7
7.4
8.5
8.2
Macedonia, FYR
17.0
15.0
11.2
7.5
6.7
8.9
9.0
9.5
10.1
10.9
10.8
Montenegro
5.2
5.3
2.9
3.2
7.2
13.5
21.0
15.5
17.6
18.4
17.2
Serbia
22.2
23.8
4.1
8.4
11.3
15.7
16.9
20.0
18.6
20.6
23.0
Albanian Association of Banks
Main Reasons for high NPLs

Economic slowdown - shortage of liquidity in the
market.

Government arrears to businesses.

Lending boom between 2004-2008 with somewhat
relaxed lending conditions.

Denominator: Low lending growth - low demand

Conservative regulatory framework (BoA) on the
classification and provisioning of non-performing
Loans

Judiciary System and lack of efficiency of
execution processes
Albanian Association of Banks
Difficult execution of collateral

Obstacles in the courts:




Trials extended beyond deadlines specified in the CPC;
Unjustified security measures established by Courts for creditors’
claims;
Limited expertise of judges on loan contracts as executive titles;
Not calculating liability for interest on unpaid amounts (accrued)

Lack of legal provisions, or misrepresentation of existing
provisions related to the process of collateral execution

Inaccuracies in the registration system of real estate and
missing information in the respective assets files

Lack of transparency in the auction processes conducted by
bailiffs (public or private) for the execution of the collateral.

Lack of standards (subjectivity) in the appraisal process;

Unreliable / delayed documentation from state institutions
(e.g. OSHEE, etc)
Albanian Association of Banks
Thank you!
Albanian Association of Banks