Supervision Annual Report Supervision Annual Report 2008 B a N K O F a L B a N I A

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Supervision Annual Report Supervision Annual Report 2008 B a N K O F a L B a N I A 2008 Supervision Annual Report Supervision Annual Report 2008 B a n k o f A l b a n i a SUPERVISION ANNUAL REPORT 2008 PB Bank of Albania Bank of Albania 2008 Supervision Annual Report Supervision Annual Report 2008 If you use data from this publication, you are requested to cite the source. Published by : Bank of Albania, Sheshi “Skënderbej”, No., Tirana, Albania Tel : 55-4-222220; 225568; 225569; Fax : 55-4-222558 www.bankofalbania.org For enquiries relating to this publication, please contact: Publications Section, Foreign Relations, European Integration and Communication Department e-mail: [email protected] Printed in: 000 copies Printed by AdelPRINT Printing House 2 Bank of Albania Bank of Albania 2008 Supervision Annual Report Supervision Annual Report 2008 C O N T E N T S A. SUPERVISION MISSION 7 B. REGULATORY FRAMEWORK AND LICENSING PROCESS 9 . Overview 9 2. New Regulatory Acts 9 . Changes to the Regulatory Framework 4. Granting a License, Pre-approvals 4 C. ON-Site Supervision 9 . On-site Supervision Activities 9 2. Cooperation with Other Regulatory Authorities 9 . Problems Observed During Examinations 20 D. BANKING SYSTEM AND NON-BANK DEVELOPMENTS 25 . Economic Environment 25 2. Key Banking System Developments 28 . Banking System Structure 0 4. Managing Bank Activity Risk 6 5. Capital Adequacy 52 6. Profitability Indicators 56 7. Non-bank Financial Institutions 60 E. CREDIT REGISTRY 6 . Overview 6 2. Regulatory Framework of the Credit Registry 64 . Main Characteristics 64 4. Augmenting the Credit Registry with Microfinance and Non-Bank Institutions 65 5. Information Generated by the Credit Registry 66 Annex . Organisational Chart of the Supervision Department (as of December 31, 2008) 69 Annex 2. Each Bank’s Specific Share to the Banking System (as of December 2008) 70 Annex . Assets and Liabilities 7 Annex 4. Banks’ Shareholders (as of December 2008) 7 Annex 5. Geographic Distribution of Banking Agencies and Branches within the Territory of the Republic of Albania as at end 2008 by Prefectures 74 Annex 6. List of Banking Supervision Regulations and Guidelines in Force (as of December 2008) 75 Annex 7. Banks and Branches of Foreign Banks Licensed by the Bank of Albania (as of December 2008) 78 Annex 8. Non-bank Financial Institutions (as of December 2008) 82 Annex 9. Unions of Savings and Loan Associations 84 Annex 0. Foreign Exchange Bureaus (as of December 2008) 95 2 Bank of Albania Bank of Albania 2008 Supervision Annual Report Supervision Annual Report 2008 T A B L E S B. Regulatory Framework and Licensing Process Table Electronic products supplied by banks 6 Table 2 E-banking services, December 2008 6 Table List of entities licensed by the Bank of Albania through years 18 C. On-Site Supervision Table 4 Examinations performed during 2008 20 D. Banking System and Non-bank Developments Table 5 Share of foreign capital in some regional countries Table 6 Banking network 2 Table 7 Banking system statistical indicators Table 8 Banking system total assets and credit portfolio share to GDP 34 Table 9 Performance of the system’s main asset items 4 Table 0 Performance of the system’s main liability items 5 Table Off- balance sheet items change during 2008 5 Table 2 H (Herfindahl) index of assets, deposits and loans concentration 36 Table Quarterly credit growth during 2008 7 Table 4 Credit to the private sector, as % of GDP in some countries of the region 9 Table 5 Credit by sector and purpose of use (in billion ALL) 9 Table 6 Term structure of outstanding credit, in percentage 9 Table 7 Currency structure of outstanding credit (in %) 40 Table 8 Currency structure of credit by bank peer-groups (in %) 40 Table 9 The share of unhedged foreign currency credit from foreign exchange risk (in%) 4 Table 20 Credit by economic sectors (in billion ALL) 42 Table 2 Credit rating as a percentage of outstanding credit 44 Table 22 Credit quality developments in the region 46 Table 2 The banking system’s up-to--month maturity gap and up-to-three- month maturity gap 50 Table 24 The system’s shareholders’ equity structure and components performance 52 Table 25 Financial leverage by bank peer-group 5 Table 26 Performance of risk-weighted assets 54 Table 27 Performance of capital adequacy ratio by bank peer-group 55 Table 28 Adequacy ratio in some countries of the region 56 Table 29 Performance of key components of the income statement (non- cumulative), in million ALL 56 Table 0 Main profitability indicators in percentage (cumulative) 57 Table RoAA by bank peer-groups in percentage (cumulative) 57 Table 2 Indicators of profitability from core operations in percentage (cumulative) 59 Table Average profitability indicators in million ALL (quarterly average) 60 Table 4 Efficiency indicator (non- cumulative) in million ALL 60 Table 5 Asset structure 62 Table 6 Asset quality 62 4 Bank of Albania Bank of Albania 5 2008 Supervision Annual Report Supervision Annual Report 2008 C H A R T S D. Banking System and Non-bank Developments Chart Paid-in capital of the system by country of origin Chart 2 Banking system employees, by bank peer-groups (in %) 2 Chart Share of peer groups to the system, by total assets 6 Chart 4 Monthly credit growth during 2008 6 Chart 5 Shares of bank peer-groups to total system’s credit (in %) 38 Chart 6 Outstanding credit granted to households and enterprises (in % of total outstanding credit) 8 Chart 7 Outstanding credit volume by term structure, in billion ALL 40 Chart 8 Credit outstanding volume by currency, in billion ALL 40 Chart 9 Sectoral allocation of outstanding credit, by purpose of use 4 Chart 0 Non-performing loan portfolio and total credit portfolio 4 Chart Performance of outstanding non-performing loans in the banking system 4 Chart 2 Current non-performing loans to total outstanding credit in the previous year (in %) 4 Chart Performance of special mention loans and non-performing loans during the last two years 44 Chart 4 Provision funds for non-performing loans 45 Chart 5 Outstanding non-performing loans by sectors 45 Chart 6 Outstanding non-performing loans by currency 45 Chart 7 Total deposits’ growth performance 47 Chart 8 Deposit growth/decline by sectors, 2 October – 31 December 2008 (billion ALL) 47 Chart 9 Deposit decline by currency (in million ALL) 47 Chart 20 Deposit structure by remaining maturity (December 2008) 47 Chart 2 Liquid assets performance 48 Chart 22 Liquid asset structure 49 Chart 2 Liquid assets by currency 49 Chart 24 Asset-liability gap by non-cumulative remaining maturity (in billion ALL) 50 Chart 25 Share of foreign funds to total liabilities of the system 50 Chart 26 Assets/Liabilities in foreign currency 5 Chart 27 Shareholders’ equity weights by bank peer-group 52 Chart 28 Net non-performing loans/regulatory capital 54 Chart 29 Risk-weighted off-balance sheet items 54 Chart 0 Capital adequacy ratio and its components 55 4 Bank of Albania Bank of Albania 5 2008 Supervision Annual Report Supervision Annual Report 2008 6 Bank of Albania Bank of Albania 7 2008 Supervision Annual Report Supervision Annual Report 2008 A. SUPERVISION MISSION The supervisory function of the Bank of Albania-the central bank of the country-is sanctioned in the Law “On the Bank of Albania, no.8269 of 23.12.1997 and in the Law “On Banks in the Republic of Albania” no. 8365 of 02.07. 1998. The Bank of Albania, in compliance with its legal responsibilities as the supervisory authority of banks and other financial institutions licensed by the central bank, is committed to: • Ensuring a sound banking activity in harmony with the Bank of Albania’s laws, rules and regulations, in order to protect depositors and prevent financial crises. • Safeguarding the banking system stability and beyond, through continuous monitoring of market developments and recommending adequate measures for banks to smoothly adapt to such developments, and be continuously managed according to the best principles. • Strengthening the public confidence in the banking system and promoting market discipline, requiring enhancement of transparency in the system. • Promoting a fair competition in the banking system and beyond, and ensuring equal treatment of all licensed entities and their customers. • Continuously and professionally communicating with financial market operators and other institutions influencing the Bank of Albania’s activity, to constantly enhance the functioning of financial market and its operators. The Bank of Albania fulfils its supervisory function through: a. Continuous expansion and enrichment of the supervision regulatory framework, for it to be easily implemented and enforced, and in full harmony with the best international practices. b. On-site inspections of licensed entities, off-site analyses of financial indicators and taking corrective action whenever needed. c. Supervisory process orientation towards identifying actual and potential risks to licensed entities, and recommending proper solutions. d. Policy making and implementation that guide the banking system towards desired developments. 6 Bank of Albania Bank of Albania 7 2008 Supervision Annual Report Supervision Annual Report 2008 e. Cooperation with financial institutions under supervision, other relevant domestic institutions, and international supervisory authorities. f. Ongoing enhancement of supervisory capacities. In compliance with the requirements of the supervisory function, the Bank of Albania strives for the highest levels of integrity, professionalism, efficiency and transparency. 8 Bank of Albania Bank of Albania
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