During the first quarter, the net profit of Albania's banking system reached 9.6 billion lekë, marking a 41% increase compared to the previous year. This surge indicates low competitiveness in certain key market segments such as public debt and payment services.
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Banking sector profits saw an annual increase of 41%, reaching 9.6 billion lekë (approximately 90 million euros) during the first quarter of this year. This reflects the continuation of high levels of public debt interest rates, increased interest in loans, and limited competition in the payment services segment.
Data published by the Bank of Albania and the Albanian Banking Association show that banks are now able to earn 20 lekë for every 100 lekë of shareholder capital and 2 lekë for every 100 lekë of assets. Raiffeisen Bank recorded the highest return on equity (ROE), earning a net profit of 28 lekë for every 100 lekë of capital, followed by OTP Bank and Union Bank with 25%. None of the banks reported losses, according to local reports.
The increased profits of banks notably do not stem from the expansion of activity but from the ability to extract more profits from the same assets. While the loan portfolio increased by 6.6% and deposits grew by 5.8%, net profits increased by 41%.
The total assets in the banking system reached 1.98 trillion lekë (approximately 19 billion euros). Banks have invested 37% of these funds in the credit market for individuals or businesses, while 40% have been placed in securities (mainly in Albanian public debt). The remaining portion is invested in the interbank market.
The success of the banking system this time is particularly linked to the increase in interest rates on public debt in lekë and the maintenance of these rates at considerable levels despite the decline in public debt due to high inflation in recent years.
Meanwhile, it is reported that loan interest rates have decreased. In March of this year, the average interest rate on loans in lekë for individuals was 6.56%. In March 2023, it was 7.54%. Business loan interest rates also decreased annually from 7.14% to 6.38%.