Banks change credit regulations, that's what they want.

Such an issue is discussed at the collection of the Financial Stability Consultative Group (GKSF). Finance and Economy Minister (MFE), Bank of Albania Governor ( BS), Board of Financial Supervisory Authority Chairman (AMF), AMF Executive Director-General, Director-General of Deposit Insurance (ASD) and other representatives of these institutions.

The audience estimated that the use of official financial documentation in the loan analysis process serves the formalisation of the economy, supports fair competition, and reduces the risk of lending to the banking sector. They estimated that falling credit levels with problems should create more favourable conditions for a greater commitment of the banking sector towards lending activity, based on the necessary care in terms of credit concentration indicators and other monitoring requirements.

Problem credit lowered by erasing, restructuring

In the presentation on financial performance and the assessment of risks for the banking sector by the end of 2017, representatives of the Bank of Albania stressed that growth of banking activity continued during the last quarter of last year, though at a lower rate affected by lower deposit growth. Crediting the economy remained moderate, where the positive contribution continued to lend the money. The trouble loan marked an apparent decline, with nearly $30.2 billion during the past year. As a result, at the end of 2017, the troubled credit report dropped to 13.2%, against 18.3% a year ago. In addition to eliminating from the balances of lost credit banks (Hree-off), the drop in credit with problems contributed the other factors, including restructuring, write-offs, etc. During the past year, the banking sector significantly improved the financial outcome, with the significant decline in the level of reserves (provigjions) in credit risk. The state of banking sector liquidity remains very good. During the past year, the capital adequateity report increased by 0.2 percentage points, marking 16.6% at the end of the year. These developments show that the state of the banking sector remains stable, with good indicators of liquidity, financial outcome and capitalisation.

Co-operation for the euro

BS representatives also briefed on the package of measures to promote national currency use in banking activities, approved by the BS Supervisor Council at the meeting of February 7th 2018. Those present confirmed the need for these measures and their commitment to acting harmonly, in line with definitions at the April 18th 2017 Co-operation Memorandum.

Secondary debt headlines market will be promoted

Furthermore, BS representatives recognised those in attendance on the joint work of the MFE and BS in terms of the company of some preparational, regulatory and operational nature actions, to promote the development of government debt titles transactions, after their release, in what is commonly known as secondary stock. Developing this market remains an important challenge for all operators operating on this market, and it is a process that will take time. This process will be conducted in regular consultation with the World Bank, the International Monetary Fund and the European Bank for Reconstruction and Development. Those present praised the need for this process and suggested the regular exchange of information about its performance.

Insurance, Positive Walking

For the insurance market, referring to the third quarter of last year, AMF representatives identified the continuation of the gross life and non-virginal insurance increases, as well as the report net damage/primes for non-virability companies. The net financial outcome of security societies also shows remarkable improvement. On the other hand, The AMF is committed to handling certain problems related to meeting regulatory requirements in some security societies. In capital markets, net investment funds activities and the number of quotas have seen increases during 2017. The main investments of investment funds, depending on the currency, are in public and private debt titles, as well as capital titles of foreign private subjects. Volunteer pension funds have also marked good increases in activity over the past year. However, the low starting base dictates their tiny weight in the overall financial system.

Interest in Capital Market

AMF representatives identified as significant capital market developments over the past year, increasing the interest of private subjects in issuing short-term debt titles with private bid, licensing the Albanian Titus Stock Exchange A. The LSE, increasing the number of financial institutions that serve as depositors for investment funds and the addition of those who serve as caretakers for titles named by private subjects. The audience estimated that these developments contribute to deepening the capital market, and stressed the need for legal and regulatory grounds to contribute to the stability of these developments. In this direction, those in attendance supported the AMF representatives' suggestion to launch a review process of co-operation practices among authorities in dealing with simulated stress situations in the financial system.

Insurance deposits grow

Representatives of the ASD also regularly attend GKSF meetings. At this meeting, ASD representatives made a presentation of the performance of deposits secured near banks and near savings-credit societies (sk).

Over the past year, insurance deposits have recognised increases in both banks and flash. In total, insurance deposits continue to be dominated by individuals' savings and demonstrate a slight advantage of currency deposits. Under the maturity schedule, the individuals' insurance deposits are dominated by deadline deposits, while the deposits of commercials and commercial companies are focused on current accounts. In line with the performance of insurance deposits, even the deposit insurance fund has marked increases over the past year. The source of security fund funding over the past year, as the law predicts in normal situations, was the payment of insurance savings from banks and paperwork, and management of financial means by the ASD.

After discussing the above issues, institutions' leaders positively praised developments in the financial system, financial markets and in the relevant regulatory framework, confirming the sustainability of the financial system. They stressed the importance of monitoring financial developments and preparing further legal and regulatory improvements to address the respective problems and to accelerate the best standards in the respective areas.

At the rest of the meeting, those attending discussed other issues of common interest, which could be discussed more thoroughly at the next GKSF meetings.

With the end of discussions at meetings under the programme, leaders of the participating institutions approved this press release and authorised its publication. /Monitor