Currently, we are working for this project to be transformed into regional cooperation taking into account that same banking groups operate across the entire region. According to banks reporting at end-September 2011, banking sector total assets expanded 9.5% from year start and about 13% from the corresponding period of a year earlier. The banking sector credit portfolio widened 9.6% during the year or about 15% year-on-year, constituting 49.1% of total assets. During the year, Lek-denominated loans increased more rapidly than foreign currency-denominated loans. The activity increase was sustained mainly by deposits increases, which constitute 81.4% of total liabilities. During the year, they were up 9.7% or 14.1% higher than the corresponding period of 2010. Liquidity ratios are stable and are expected to consolidate following recent regulatory requirements introduced by the Bank of Albania. As at September 2011, banking activity made a profit of ALL 1.3 billion and return on assets and capital was 0.2% and 1.9%, respectively. Capital adequacy ratio was 15.1%, better than at the end of H1 2011. This was due to capital increase by some banks, following the Bank of Albania’s requirement. These developments confirm stable public confidence in the Albanian banking sector and the significant contribution of the banking sector to fund the Albanian economy in this year. These may be considered as precious achievements while the Albanian economy and its economic agents faced with more challenges in 2011. Loan portfolio worsening and credit risk management requirements were matched by higher provisions by banks, which in turn contributed to worsened financial result.

In response, banks managed to optimise their operational costs and improve their capital ratios. In this regard, the Bank of Albania has emphasised the accurate identification of the credit portfolio situation, asking the banks to take firm action and recover their non-performing loans value. This may be realised through support to qualitative borrowers in temporary difficult situations as well as through execution of collateral in the case of hopeless borrowers. Execution of collateral and the need to improve the relevant legal and operational framework are considered as a priority by the Bank of Albania. Following recommendations from an earlier  BIS central bankers’ speeches  1  forum organised on this topic, the Bank of Albania is fully committed so that other public authorities address the issue with priority. Furthermore, in cooperation with the banking sector, the Bank of Albania has identified and undertaken a number of other supervisory and regulatory actions, aiming at improving operational capitalisation situation and minimum liquidity requirement both in the national and foreign currencies. Next, some amendments to the Law “On banks in the Republic of Albania” were drafted and approved, which, in essence, complete and improve banking activity supervisory framework. These actions were pivotal for addressing an added risk perception due to international and regional financial developments. I take this opportunity to thank you for your cooperation and concrete actions with regard to the implementation of these new requirements, confident that you will fully accomplish them within the required timeframe.