Non-banking financial institutions earned over 30 million Euros in Albania

 

 Non-bank financial institutions posted a significant increase in profits last year.

According to data from the Bank of Albania, last year these institutions reported a positive financial result of 3.66 billion of leks or 30.5 million €. The net profit of this sector has increased by 57% compared to the previous year.

For the most part, this is explained by the distribution of dividends by commercial banks, which have non-bank financial institutions as shareholders. The increase in the profits of some of the main lending and microcredit institutions, such as Fondi Besa, Iute Credit Albania, Kredo Finance, and Micro Credit Albania, has also had a positive impact on the growth of the sector's profits, Monitor reports.

The result of non-banking financial institutions constitutes about 14.5% of the result of the banking system. However, the profitability indicators resulted in slightly higher levels compared to the banking sector, especially the return on assets. Return on assets for the market reached 4.8% (up from 3.44% in 2020), while return on equity reached 13.83% (up from 9.47% in 2020).

Last year was positive for the business volume of non-bank financial institutions. At the end of 2021, the gross loan portfolio for IFJBs reached 42.1 billion, an increase of 15.1% compared to the previous year. The main contribution to this increase was given by the microcredit segment, which brought about 70% of the addition of 5.5 billion Lek to the loan portfolio.

Most of the loan portfolio of IFJBs is held by lending and microcredit entities (76.1%). Next is the portfolio of financial lease entities (22.8%) and the portfolio of factoring entities (1.1%).

The credit portfolio of IFJBs reaches 5.9% of the total credit of the banking system, maintaining almost the same weight compared to the previous year.

In net terms (minus provisions), the loan portfolio reached the value of 37.4 billion leks, an increase of 11.6% compared to the previous year. The somewhat lower growth in net terms is mainly due to the addition of provisions to the deterioration of the quality of the loan portfolio.

Problem loans report rose to 13.6%, from 11.2% a year earlier. The increase in non-performing loans has come mainly as a result of the deterioration of the quality of the portfolio in the microcredit entities. In recent years, this sector has been growing at a fast pace and the relatively high levels of risk assumed have also been reflected in a deterioration in the quality of the loan portfolio.