2013 was the toughest year for the economy of Albania in the last decade, but banks managed to increase their earnings by 74 per cent to 6.6 BN leks (46.9 million euro) compared to 2012, data from the Bank of Albania shows.
This jump in earnings came as surprise due to the persistent increase on bad loans during the last few years. At the year end, bad loans were at 24 per cent of the total loan portfolio. In the third quarter 2013, banks cleared their balance sheets from some lost loans, which caused massive looses.
At the end of September, central bank data shows looses of about 1.3 BN leks for the nine month period, while in the last quarters, banks allowed themselves to cut expenditures on provisions, thus declaring abundant profits. Net earnings from interests fell by 0.6 per cent to 34.8 BN leks while net earnings from other services fell by 3.3 per cent to 5.4 BN leks.
Banks manages to make profits in Albania despite large looses by bad loans due to the high interest rates on loans and to the legal flexibility to change conditions on current loans.