Local banks refuse 6.2% credit applications, those with foreign capital 27%

The banks refused around 18.5% of credit applications in the second quarter of last year.

According to data from the Bank of Albania, the rate of rejection has marked growth by 2.5 percentage points compared to the first quarter of the year, but appears in a slight decline compared to the same period a year ago, and this decline is seen in all divisions according to the clientele type.

The analysis of the Bank of Albania confirms major differences in the degree of refusal to apply for loans from local capital banks compared to banks with foreign capital. During the second half of 2021, the total rate of refusing credit applications by local capital banks has dropped to 6.2%, down from 8.3% a 6-month earlier. While for foreign capital banks this rate has increased to 27%, up from 21.1% reported to the past six-month.

It confirms the fact that banks with domestic capital in general are more inclined to increase lending and gain market share. However, to a certain extent, the highest degree of rejection in foreign banks can also be explained by the greater number of the accusations they receive because of the greater market and the highest number of clients.

According to clientla segments, foreign banks remain more inclined to lend the company segment, especially large enterprises and the refusal rate for this group of companies has dropped significantly over the past two years. On the other hand, the rate of rejection against the individual segment has marked increases for the foreign bank group and decline for the group of banks with domestic capital. This given proves that banks with domestic capital are more interested in the segment of individuals, while foreign ones prefer the business segment, where medium value loans are bigger.

For example, in the individuals' segment local capital banks refused only 6.1% of credit applications, while foreign capital banks refused 28.3% of the total applications. In the business segment, however, reports especially vary significantly. Foreign capital banks have rejected only 1.4% of credit applications, while local capital banks have a 6.1% drop rate. The relief of disincentivement measures and recovery of economic activity in the country following the resumption of work in the affected sectors has continued to positively influence the creditive trend of banks, especially towards the group of large companies.

During the second six-month 2021, banks have reportedly received a total of 67,126 loan applications, of which 7% belong to the business sector and 93% belong to the individual sector. Compared to a year ago, this facility has marked a slight shift in favour of individual customers. The total number of loan applications reviewed by banks has marked a slight increase compared to the previous six months, but has dropped by about 21% compared to a year ago. The decline in annual terms has come from the segment of small- and medium-sized enterprises and individuals, while the number of applications reviewed by other categories of companies, where large enterprises dominate, has resulted in growth. /Monitor. al