Honoured,
It is my pleasure to be here today to discuss and take notes of this very important
topic to our country's economy, and would like to express my highest
consideration to the Kosovo Banking Association, who on a daily basis is
advancing Kosovo's banking sector representation in all aspects.
I consider that the topic of this conference is fitting as it has been raised at a time
when the banking sector has made some quite significant progress in improving
conditions for a sustainable financing of the economy.
***
In the last few years, the Kosovo banking sector has significantly increased its role
in terms of funding the country's economic growth by accelerating
the pace of
credit growth and considerably reducing credit interest rates. The easing of credit
standard, followed by a reduction of credit interest rates, served as important
incentives for increasing credit demand, thus resulting with an annual credit
increase of 11.6 percent in October this year. This shows that access to finances,
which has been long reported by businesses as a key barrier to the development of
businesses, is now constantly improving. The same can be observed from the
increased crediting of economy sectors that during previous periods had limited
access to bank financing. The concrete examples of this are considered to be the
sectors of agriculture and production, which have lastly been among sectors with
highest increase of accepted credits. However, the total amount of credits issued to
these sectors still remains low. In October 2018, the credits issued to the
agriculture sector represented 3.8% of total credits to enterprises, whereas credits
to the production sector represented 12.7% of total credits. Taking due account of
the fact that today's topic is related to the banking sector's role in the funding of
development, I would like to emphasise that a greater support to these economic
sectors, and other sectors with high potentials of generating economic growth, is
fundamental for achieving a more viable economic growth.
Nonetheless, we are aware that the diversification of the banking sector credit
portfolio does not strictly rest on on the supply part, but rather and to a great
extent, also depends from the credit demand part. In this context, I would like to
emphasize that banks have a high financial potential for further increasing
crediting, they have eased credit standards, and have significantly reduced the cost
of access to bank financing. In October 2018, the average credit interest rate was
6.6%, which represents a significant improvement compared to a period not so
long ago. These indicators show that credit supply has significantly improved.
However, in order to ensure better crediting for sectors with currently lower access
to bank financing, it is not enough to only improve credit supply, it is also
these sectors'
necessary to ensure that credit demand is higher and of a better
quality. With that I wanted to say that a more comprehensive approach is needed in
terms of identifying and supporting the development of sectors that are of great
the country's economic growth.
importance to
We consider that the establishment of the Kosovo Credit Guarantee Fund
represents an important step forward in terms of increasing support to these
sectors. So far, the amount of credits guaranteed by this Fund has reached EUR
71.3 million and is distributed to some 1,836 micro, small and medium enterprises.
However, it is noted that the structure of credits, by economy sectors, which are
guaranteed under this Fund is quite similar to the structure of unguaranteed credits,
whereby credits for the trade sector prevail considerably. Therefore, we expect the
Kosovo Credit Guarantee Fund, with the purpose of better serving its purpose of
establishment, to play an even greater role in increasing credit financing for sectors
with less access to bank financing but with great importance to a higher economic
development.
***
In order to have a banking sector that ensures sustainable financing for the
country's economic development, the vital precondition is for the banking sector to
be sustainable. Having said this, I would like to reconfirm that, based on all
Kosovo's banking sector remain stable. I would
financial soundness indicators,
like to attach particular importance to the good quality of the credit portfolio,
the bank's good credit risk management, and could just as well serve
which shows
as an important indicator of the favourable economic environment for banks
operation in Kosovo. During September of this year, the rate of non-performing
credits was 2.8%, which reflects a very good situation in terms of the quality of
credit portfolio. The satisfactory stability of the banking sector is also reflected by
other indicators, such as capital adequacy and liquidity indicators, which have
consistently exceeded regulatory requirements and represent the high solvency of
the banking sector.
***
The Central Bank of the Republic of Kosovo, with all of its capacities, is in the
function of supporting sustainable development of the financial system, providing
all necessary infrastructures to support the development of financial institutions
and at the same time ensuring that their activity provides financial stability. In this
regard, we are providing the banking sector with utmost modern standards of
financial regulation and oversights, thus making banks and other financial
institutions in Kosovo operate pursuant to rules that are applicable in all developed
countries. Also, the CBK provides the banking sector with a modern financial
infrastructure. The interbank payment system, a modern, efficient and secure
system, and the credit registry, which offer banks the most modern services in this
field, are good examples to illustrate the financial infrastructure development in
Kosovo.
***
In recent years, the CBK has increased its engagement in the function of protecting
the rights of financial service consumers, thus directly serving to the protection of
public interest. Financial education activities represent a very important part of this
intervention aimed at providing the public with clear information regarding
opportunities offered by the financial system and their rights in the use of financial
services. For the purpose of protecting citizens and businesses more effectively, we
have drafted a Regulation on the disclosure of information by banks, and have
established the Division for dealing with complaints by users of financial services,
which addresses all complaints against financial institutions.
The CBK, from the moment it became functional, has and still fully supports the
development of the financial system; however I would like to emphasize that we
are committed to ensuring that the financial institutions' development takes place
in full compliance with the principles of protecting consumer rights In this regard,
we are determined to further increase our commitment for protecting the rights of
financial services users and requests from banks to carefully consider their legal
requirements and policies in order to avoid any unreasonable obstacle that would
impede normal interaction between citizens and the banking sector.
We are committed and expect that the continuous development of the banking
sector will create conditions for easier access and more favourable conditions for
citizens and businesses in the banking services. This is in line with the Sustainable
Development Objectives, prepared by the United Nations, whereby under the
objective of economic growth at global level, the requirement of improving access
to financial services for ensuring sustainable and inclusive economic growth is
clearly emphasized.
***
At the end of my speech, I would like to reiterate that Kosovo's banking sector is
Kosovo's
in a sound financial situation and with a constant increase of funding to
sustainable economic development; however, it requires an even greater inter-
institutional commitment for creating the necessary conditions so that this sector's
contribution to the country's economy is even greater.
The CBK will continue to support all aspects of banking sector development, by
providing the entire necessary both financial and regulatory infrastructure. The
close cooperation between the CBK and the banking sector, facilitated to a great
extent by the Kosovo Banking Association, has allowed us to effectively address
and maintaining the sector's stability and we are therefore
the needs for developing
committed to further advance our constructive cooperation.