Banks earn about 90m euros

The ten commercial banks operating in the market, eight of them with foreign capital and, according to experts on financial issues, have found suitable markets by keeping high profit rates.

According to Central Bank data from the Republic of Kosovo, the value of bank profits for 2018 has reached 88m euros. Incomes from credit interest have marked growth and were among the main factors of profit increase, along with revenues from tariffs and commissions.

Flamur Keqa, an expert on financial issues, in a conversation for Radio Free Europe, says that in the absence of cash, citizens and businesses are forced to use loans with high interest rates, which automatically affect bank profit growth. The value of non-aligned loans in commercial banks is the lowest in the region.

Major profits of private banks in Kosovo are also provided by the huge gap between interest rates and deposits.

Besides loans, the services that banks offer to consumers in Kosovo are services at extremely high and favourable prices for banks. So all of these have determined that commercial banks are the most profitable businesses in Kosovo in these 20 years”, Keqa said.

The average interest rate for loans in commercial banks is 6.3 percent, while the interest rate for deposits is 1.2 percent. The value of loans in these institutions has reached about 3 billion euros, while the value of deposits (responsions) at around 3.5 billion euros.

The other expert on financial issues, Iron Murati, says that despite the fact that commercial banks in Kosovo, in recent years have reduced credit interest rates, they have expensive the price of tariffs for their clients, adding that the move has maintained their profit.

The other reflection that took place in bank profits, he says, is that banks have closed some sports and set up electronic devices to perform services.

Many banks have closed several branches, and this has reflected cost reduction. At the same time, there have been reductions of deposits that it has also reflected in lowering the interest rate. But the difference between loans and deposits has been kept equally. At the same time, banks have become more efficient, this has contributed to increased productivity”, Murati told Radio Free Europe.

Several commercial banks in Kosovo, several years ago, have closed some sports and set up electronic devices for performing services. This, according to bank officials, has happened because of the reduced use of cash and that customers will not be waiting in front of the sports.

Banks are already looking to customers for many services to perform on their own, as well as on e-banking.

And Flamur Keqa says that with branch closures, the number of employees in these institutions, which affect bank spending, is reduced.

“Reducing the number of workers will automatically affect greater profits for banks. Perhaps not in a short period of time because banks should invest in digitisation of their systems, but in the medium and long term it certainly affects additional profits for banks”, Keqa said.

The reduction in the number of employees and units of banks is also noted in reports of the Central Bank of the Republic of Kosovo.

In the report called “The CEC's monthly information”, reportedly in 10 commercial banks in June of this year, are employed by 3299 workers in 217 units, while 3548 workers in 266 units were employed in 2015. In a simple estimate, 249 workers have been evacuated for four years, while 49 branches in different regions of Kosovo have been closed.