Banks take citizens to “Agents”

“Banks required multiple documents. In the end, I saw that one of these microfinances had announced a loan bid of 5 thousand euros without mortgage,”, says D, as it shows that the loan was granted briefly.

He is aware of the high interest, but he says his home condition was heavily charged.

Like D. There are many Kosovars who are increasingly addressing microfinance institutions for loans. Neither is the 23 percent interest that these financial institutions apply to stop them.

In certain cases, however, and depending on the microfinancial institution, the loan goes up to 30 percent.

From citizens and economic connoisseurs, these institutions have often been described as hawks because of high interest rates.

We never had a better job since we were here. The number of citizens heading towards our credit” has increased greatly, an official working in this sector said under anonymity.

He says one of the main reasons for this is the contraction of credit from commercial banks.

“also we don't require much documents to get a” loan, he says.

This influx of citizens towards microfinance is confirmed by the latest report by the Central Bank of Kosovo “The quarterly assessment of the economy”, from January to June 2017.

The microfinance sector's credit objective during the first quarter of 2017 was marked by accelerated credit value of 31.9 percent”, the report says.

Mostly loans to microfinances take over family economies, but great growth also had loans for businesses.

Family economies, which have a participation of 64.9 percent in total sector loans, were characterised with an annual increase of 27.8 percent. Also, loans to companies representing 35.1 per cent of total sector loans marked an annual increase of 40.2 per cent”.

Microfinance Gaining Tried

This caused the profit of the microfinance sector for the January-June 2017 period to triple over the same period last year.

“So by June 2017, the microfinance sector achieved profits worth 3.9m euros, compared to the profit of 1.6m euros in the same period of the preliminary year”, the report says.

The BQC report stresses that such a large increase in profit resulted from increased interest revenues.

The highest income growth (most of those of interest) compared to the lowest growth in expenditures affected higher profits realised in this period. As a result of the positive financial performance during the first quarter of 2017, the profitability index marked improvement”, the report said.

This sector also stands well with bad loans. The level of non-aligned loans in proportion to a total of loans by June 2017 declined to 1.9 percentage points against the preliminary year, dropping to 2.5 percent, the lowest rate in recent years.

Meanwhile, by the second quarter of 2017, microfinancial assets reached 169.2m euros, marking significant annual growth of 24.5 percent.

The primary contributor to the growth of sector assets was the growth of gross loans, mainly financed by borrowing in the external sector, which dominates the overall structure of microfinancial sector assets (76.1 per cent)”.

Daggers remain above 22 percent

But despite the liquidity of the sector and higher profit, it hasn't reflected on the scale of interest.

They continue to be too high. Currently, the interest in microfinance applications is 22.1 percent, but there was an increase.

The average Norma of interest in microfinancial sector loans in June 2017 rose slightly to 22.1 percent”, the report says.

The interest rate for loans to family economies rose by 0.9 percentage points, while the interest rate for loans to companies was characterised by 0.2 per cent.

“Under loans to companies, the service sector turns out to have the lowest interest rate on credit. While, the industry sector, despite the decline, continues to have the highest interest rate on credit”. /The Word/