Bank of Albania: Bank sector carefully evaluate new dangers from war in Ukraine

The statement estimates that in the second quarter of 2021, banking sector activity was held steadily. Deposits and loans increased rapidly, credit quality followed improvements, and other financial sustainability indicators remained at adequate levels. According to the Declaration, exposure of the banking sector to risks was presented as controlled. Economic developments during the year 2021 were quite positive, although economic growth, lower unemployment rates, and wing shocks were accompanied by increased inflationary pressures at the end of the period.

However, the Declaration estimates that military aggression in Ukraine and sanctions against Russia have further exacerbated global problems with production chains and supply, affecting further growth in the price of oil and gas, cereals and metals. New projections suggest sustained inflationary pressures in the short term, which could be accompanied by increased production costs, consumer and investment reductions, namely slow economic growth. The response of economic and financial policies to ease this shock is deemed appropriate in conditions where uncertainties about geopolitical developments and the energy situation are significant.

According to the Supervisor Council, these developments identify the need for economic and financial policies to preserve the elements of flexibility to respond in line with the dynamics of developments. “The banking sector's direct exposure to countries in the above conflict is small and will not affect the financial sustainability indicators of the event. But indirect exposure is determined by economic performance, macroeconomic sustainability, and borrower performance. As before, for the banking sector, the importance of a regular assessment of the degree of exposure to new risks and of maintaining a proactive attitude towards taking measures to tame and meet them. In this direction, the Bank of Albania remains ready to take all necessary actions under the law to support banking activity and contribute to the stability of the financial system,” to the Declaration.

At today's meeting, the Supervisor Council also decided the re-election of Natasa Ahmetaj to the post of second vice Governor of the Bank of Albania. Natasa Ahmetaj held the task until December 2021, when her first term as a member of the Supervisory Council ended. At the end of March, she was voted by the Parliament again as a member of the Council, along with Anastas Angjeli.