Kosovars in trouble with loans, over 45 thousand calls for delaying their payment

The Kosovo Central Bank (BQK), along with the Bank Association, had made the decision that businesses and individuals, who have been in decline in revenues due to COVID-19 disease, which causes the Coronavirus to be allowed to suspend loan installment payments from March 16th over a three-month period.

The statement Ahmeti, spokesman at the CEC, in a response to Radio Free Europe, has indicated that the total value of 44,670 requirements for delaying payment of installments by 31 March 2020 is 1.3 billion euros.

“As far as the context of the sector is concerned, businesses make up most of the value of pushing 30.3 percent of the credit portfolio or 71.5 percent of the total value of demand. In all, the demand was 12.1 percent of the credit portfolio, with 39.5 percent of it being requests of the physical persons who are employees in the private sector”, Ahmeti says.

Those employed in the private sector in Kosovo are those who are most affected by the measures Kosovo's incumbent Government has taken to prevent the spread of the virus.

The forced closure of economic activities in various sectors had forced employers to suspend many workers.

During April, meanwhile, given the CEC's preliminary data, there is reportedly no increase in the number of requirements for postponement of loans.

The total value of loans in commercial banks according to CEC data, by the end of February 2020, was over 3 billion euros.

Kosovo banking sector stable

Based on Kosovo Central Bank reports, it is considered that the financial sector in the country continues to have stable performance, to be well capitalised, liquid, stable and functional in providing services to the country's citizens.

The executive director of the Association of Banks of Kosovo, Petrit Balija, tells Radio Free Europe that the body's pandemic has had an impact on the banking sector, but in Kosovo this sector is stable and well capitalised.

“As far as the loan extension programme is concerned, banks are certainly having an impact on their revenues for this period, but thanks to sufficient liquidity and capital that they have had earlier before the pandemic, in this emergency banks are certainly coping well with the situation or the extension of the loan, and I am confident that after the end of the period of postponement of loans, banks will continue to function regularly, and customers will be better able to return loans”, Balja says.

The banking sector in Kosovo is characterised with a large presence of foreign capital, where 87 percent of total assets are managed by foreign banks, so foreign capital dominates eight of the ten banks currently operating in Kosovo.

Total effects, after pandemic

Like all other businesses, the banking sector has been influenced by the pandemic, however, Prime Minister Ahmeti, BQC spokesman, says commercial banks have played an important role in easing the burden of the country's businesses and citizens, in accordance with their credit obligations to the banking sector.

The “as far as the full effects of pandemic on the banking sector, according to the Central Bank of Kosovo, they will appear after the end of the pandemic through non-aligned loans and their impact on the performance of the banking sector”, Ahmeti says.

With bank terms, loan returns delays by the borrower within the 90-day deadline are known as problematic loans and considered non-aligned loans.

According to Kosovo Central Bank data, the non-forming loans of the banking sector before pandemic have been at the lowest historic level. At the end of 2019, they were only 2 percent, the lowest rate in countries in the region and lower than in many European Union countries.

In this situation, according to the CEC Kosovo is in a very good position to cope with the eventual increases of non-aligned loans.