Financial institutions in Albania lowered their profits but increased their loan-loss provisions in the first half of 2013 in an attempt to relieve the burden of non-performing loans, the country's central bank said Friday.
As non-performing loans rose to around 25 percent during the first six months of 2013, Albania's commercial banks and financial institutions adhered to strict lending standards, almost turning off for businesses while showing growing interest in purchasing government bonds, said the central bank in its Financial Stability Report.
"The sale of around 6 percent of the total of bad loans to mother banks has had a great impact in this aspect," central bank experts said.
The experts believed a government decision to pay off all debts to private sector and public contractors will give a fresh positive impetus to the country's banking system, as it would enable businesses to repay loans and help reduce the bad loans rate.
"Payment of debt the government owes to the private sector would help to reduce by 2 percentage points the level of bad loans," experts said.