Page 77 - Central & Southeast Outlook 2020

5.0​ ​Financial sector 5.1 ​Finance - Albania
Reducing the non-performing loan (NPL) ratio is a central bank priority for 2020. ​The gross NPL ratio of Albanian commercial banks fell to 10.61% of the total loan portfolio in September 2019, compared to 12.89% in the same month of the previous year, according to the latest statistics office data.
Loan portfolios improved as the central bank continued to restructure the NPLs of large borrowers with mandatory write-offs.
The World Bank said that Albanian banks exceeded the required minimum capital adequacy ratio of 12%, with the sector averaging 18.5% in June 2019 while the liquidity ratio was adequate at 21%.
Due to the recent consolidation of the sector, the number of Albanian banks has been downsized to 12 from 16.
5.2 ​Finance - Bosnia & Herzegovina
The share of non-performing loans in Bosnia & Herzegovina has been declining constantly and was below 9% in 2019.​However, it remained nearly three times its pre-crisis level of 3% at end-2008, weighing on lending activity and banking sector profitability. The International Monetary Fund (IMF) has required that Bosnia modernise its banking legislation, strengthen cooperation among the financial sector agencies and address the high level of NPLs.
So far, the country has not taken any measures in that direction. However, as a new prime minister, ​Denis ​Tegeltija, has finally been appointed after more than a year of political deadlock, legislative changes could follow in 2020.
Bosnia’s banks posted a combined net profit of BAM328.2mn (€167.8mn) in the first nine months of 2019, up by 4% y/y, according to central bank data. The total revenue stood at BAM1.1bn with interest income falling 0.5% y/y to BAM626.9mn.
As of end-September, bank assets increased by 7.9% y/y to BAM32.81bn. The growth of Bosnia’s bank assets was due mainly to an increase in loans, which accounted for 62.3% of total bank assets in
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