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Albania’s Banking Sector Meets International Standards

Tirana, Albania - As Albania’s economy continues to grow, its banking sector has been adapting to changing regulations and market conditions. The country’s banking sector is fully private, with 14 operational banks operating in the country.

A Thriving Banking Sector

According to a recent report by the Bank of Albania (BOA), the sector remains well-capitalized, profitable, and liquid. Profits reached around $82 million in 2018, while the capital adequacy ratio stands at 17.9%, above Basel requirements. The sector’s assets reached $12.7 billion at the end of 2018.

Regulatory Framework

The BOA has been tightening supervision rules over banks since the global financial crisis to mitigate the risks of contagion posed by regional banks. The regulatory framework aligns with international practice, ensuring a stable and secure banking environment for both domestic and foreign investors.

Market Share

  • Turkish National Commercial Bank: Commands 31% market share
  • Raiffeisen Bank (Austria): Holds 16% of the market share
  • Credins (local bank): Has a market share of 14%
  • Greek banks: Decreased to 5.6% at the end of 2018, down from over 15% in recent years

Notable Developments

  • The American Bank of Investments (ABI Bank), owned by New York-based NCH Capital Group, acquired the National Bank of Greece in early 2018.
  • Hungary’s OTP Bank Group completed the purchase of Societe Generale Albania in 2019 and has expressed plans to expand further in the market.

Future Prospects

Non-performing loans continued to fall in 2018, reaching 11.1% in December compared with 13.2% in 2017. The stock of outstanding loans, particularly to the private sector, contracted due chiefly to the appreciation of the domestic currency. The banking sector’s future prospects look promising, with a growing economy and increasing investor confidence. However, the regulatory requirements will remain stringent to ensure that the sector remains stable and secure for both local and foreign investors.