BQKA governor warns lower interest rates on credit

The interest rate for credit will drop over the next year, Kosovo Central Bank Governor Fehmi Mehmeti has told Online Economy. Mehmeti has added that 70% of loans are dedicated to businesses, and that, according to him, shows the role of the banking sector in supporting the country's economy. According to him, through this decrease, access to finance in the banking sector will be eased, and on the other hand, financial mediation rates will increase.

“As far as credit interest rates are concerned, we have positive developments in this context, for the fact that with the latest data available we have effective interest rates on credit for business and family economies marks 6.34%. If we see the effective interest rate of loans for businesses alone marks 5.85%, until we see the effective interest rate for mortgage loans marks 4 to 5%”.

This has increased and facilitated financial access to the banking sector and on the other hand to increase financial mediation rates. I have to point out the fact that somewhere around 70% of loans are dedicated to businesses, and this shows the role of the banking sector in supporting the country's economy”.

As for deposits, they amount to over 3 billion euros, with 70% of them belonging to the family economy.

“Deposit totals 3.13 billion euros with an annual increase of 5.8%, 70% of deposits belong to family economies, while the rest belong to businesses. Given two indicators, reducing the continued interest rates of year-on-year and increasing competition in the banking sector are the main factors that make us believe that the interest rate will decrease further. If we go back five years ago, the interest rate on the loan was equal to”

As for microfinance institutions that function as nongovernmental organisations, he said they are important to the country's economy, while stressing that they are looking at opportunities for acceptable solutions.

The law for microfinancial, financial and banking institutions is now in the Kosovo Assembly, is in the second reading, the target point is this, and what further with these microfinancial institutions that have the NGO statute. This sector is viewed as a credit supplement”.

If we look at the daily basis in this sector we have some 34% credit growth, on the other hand, the level of performance loans in this sector is 2.6% and we're interested in keeping them as a sector, but we're also interested in making a choice for these microfinance institutions that have the status of NGOs, a solution that is acceptable to the state of Kosovo, but also for those institutions”.

Mehmeti said Kosovo stands on a positive trend in terms of the financial sector as far as it stressed they are drafting the new 5-year plan for the Central Bank. “As far as developments in the financial sector are concerned, the financial sector year-on-year is marking growth, if we look at it on an annual basis, the financial sector has marked growth like all indicators, there is an increase of assets around 6%. If we look at the banking sector that the main component is characterized by increasing all indicators, such as loans where we have an annual increase in 12% deposits of 5.8% and 6% assets, so a comparison on an annual basis.

This shows that banks are well capitalised on the other side of banks are liquid. The liquidity report marks 33%, which is above the required regulatory minimum required to be 25%”.

“We have managed to fulfill the strategic plan we've had for 5 years, and we're actually drafting the new 5-year plan. This plan is based on 7 main pillars that the first pillar is to improve the quality of regulation of financial institutions, the second goal is to increase the efficiency and stability of the payment system...”.“... improve the quality of statistics and economic analysis, increase the protection and users of financial and payment services, effective and effective provision for public financial institutions, strengthen central Bank financial sustainability, modernisation of processes and operation of BQ”

In March of this year, the Kosovo Assembly with 60 votes has elected Fehmi Mehmetin new governor of the Kosovo Central Bank (BQK). Fehmi Memeti in September 2017 was appointed by the BQK Board to task the Governor, while in 2013. Mehmet had been appointed to the post of deputy governor for financial oversight at the BEC.