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Opinion / Editorial

2022: Year of credit

2022: Year of credit

The rapidly growing economic activity during 2021 that we left behind, constitutes a strong basis for increasing consumption and consumer and investment loans during this year. The stimulating monetary policy of the Bank of Albania has reduced financing costs, stimulated credit growth and helped alleviate the financial situation of borrowers. In this way, it has supported the expansion of economic activity and created the preconditions for returning inflation to target during this year. Bank lending rates for businesses and individuals have remained low, reflecting the good liquidity situation and the supportive behavior of banks to their customers. Our central bank influenced commercial banks to help businesses and individuals in need. Return of the economy to normal, Following the lifting of restrictions on the Covid-19 pandemic, mass vaccination and increased public sector activity have led to a significant increase in bank lending, one of the irreplaceable engines of the economy for December 2021. Auxiliary role has also played Improving the credit supply, with many new products (new types of loans), attractive and courageous, as well as the low level of non-performing loans, as a result of the Bank of Albania's efforts. Also, the somewhat calm domestic political environment has contributed to banks, business and citizens being less stressed and credit growing significantly throughout 2021. The outlook for this year is even more positive. In the period November-December 2021, credit growth was supported almost equally, both in lek and in foreign currency. However, the annual growth of 11 percent of lek loans is significantly higher than that of foreign currency of 4.5 percent, which is in line with the objective of our central bank to increase lending in the national currency, as a means of strengthening our economy. . The positive developments for the last two months of the year came especially from the most important segment of credit in terms of volume, that of businesses. Credit to businesses increased by 23 percent compared to the same period a year earlier. This shows that businesses have returned to productive activity and services with intensity, investing without restricting their opportunities. Particularly in the last quarter of 2021, business lending has shown visible signs of improvement. Meanwhile, lending to citizens continued its positive performance. In the ten months of January-October 2021, banks have provided about 197 billion ALL loans, or over 1.6 billion euros. It is 84 million euros more, compared to the same period of 2020. The value of the new loan is very close to the level of 2019, which proves a continuous recovery from the effects of the pandemic. In the progressive annual increase of credit, the largest contribution was given by non-entrepreneurial citizens (individuals), which shows that consumption is approaching the levels of the year before the pandemic. In value, for 2021, citizens have received 17 billion ALL or 140 million euros more loans. The increase has come especially from loans for the purchase of real estate, where lending this year has reached the highest historical levels, surpassing the year before the pandemic, 2019. On the other hand, The significant improvement in economic growth compared to last year is gradually increasing lending in order to finance consumption. Banks are appearing willing to take more risks. Recent months have seen no shortage of relatively high value loans (millions of euros) in the corporate segment. Health, the positive performance of lending to the economy is more clearly seen in the performance of the stock, the total amount of credit. The significant increase in the types of loans, in addition to new lending, is also influenced by other factors, such as the reduction of write-offs of bad loans from commercial banks (there are always fewer bad loans), loan restructuring (extension) loan repayment period, etc.), applied after the pandemic, which led to an increase in the share of long-term loans in the total loan portfolio, an extremely positive development for the sustainability of lending to us. All these reasons make us believe that this year, 2022 will be the year of the Albanian bank loan.