ardian fullani : improving the performance of albania ’ s banking sector speech by mr ardian fullani, governor of the bank of albania, at the year - end event with the albanian association of banks, tirana, 17 december 2013. * * * dear bank executives, your excellency ambassador sequi, dear mr. ilahi, dear mr. pencabligil, it is a pleasure for me to participate in this year - end meeting, as we reflect about the challenges we faced and the objectives we accomplished in this year, and endeavour to identify issues that may arise over the next year. given the celebrations time and the spirit of this meeting, i would rather not dwell upon all the issues i would have liked to. however, i will share with you my opinion on two issues i consider as important for a good performance of the banking sector over 2014. before moving on, we should acknowledge that the year we are leaving behind was a difficult one for the banking sector. in its development cycle for over more than one decade, this year, the banking sector ’ s growth slowed down sharply and annual lending levels contracted. deteriorated asset quality, dictated by credit, has led to lower financial profit due to higher provisions needed. these developments have reflected the overall economic slowdown and domestic demand drop resulting from lower private consumption and investments. however, other developments highlighted the banking sector ’ s capacity to properly respond to and cope with these challenges. the banking sector has maintained ample liquidity and capital levels thanks to the further rise in public deposits and added capital by parent banks. in terms of non - performing loans, obvious efforts have been made to restructure credit and sell off non - performing loans to non - bank financial institutions. the albanian association of banks has played an active role in discussing the problems with relevant authorities and identifying solutions through the regulatory treatment of nonperforming loans, notably, the legal amendments to collateral execution process, which entered into force in september 2013. through its activity, the banking industry may transform 2014 into a better year for both the banking industry and the albanian economy. i think that this may be achieved through harder work in the following aspects : the first aspect pertains to restoring lending to adequate levels in albania. this objective may be achieved by interlinking these three elements : a ) cleaning up balance sheets from non - performing loans. it is indispensible that you should mark evident progress during 2014 to write off loss loans from their balance sheets

to open a bank account. regulatory authorities in respective countries could be of help in this respect. also, albanian banks may receive albanian workers ’ remittances via “ banking correspondent institutions ” in the resident country and microcredit and microfinance albanian organizations which could serve as local agencies to handle this process. third : directing workers ’ remittances toward country ’ s development needs. usually, emigrants are out of the main focus of banking services, since this category of clients is considered to have unstable jobs. nonetheless, there exists opportunities to offer financial services to emigrants too. among others i could mention here : linking of workers ’ remittances with investments for example by channelling remittances flows toward micro - credit loans or projects ; also supporting of migrants ’ contribution and migrants societies in the development of the country. remittances could also help approaching rural areas population to the banks. if the recipient families also decide to keep remittances in their bank accounts this could assist economic development as more funds are available to be lent to private sector. microcredit programs and qualitative improvements of banking infrastructure, in concert with introduction of new financial instruments that would attract more remittances, are also important. finally, i would like to express my sincere appreciation to those involved in this conference which provides us a valuable support in our efforts to improve effectiveness of remittances utilization in our economies. i am confident that the distinguished speakers from various institutions, who are present at this conference, would share further helpful ideas and suggestions ( we already heard some very interesting ones in the previous discussions ), thus ensuring the formulation of sound measures to be incorporated in our policies on remittances. and i strongly hope this exchange of experiences and expertise will continue in the future and contribute producing adequate human, infrastructure, and institutional capacities to transform remittances from potential into real driving forces for the development of our countries. again, my highest consideration for this activity and thank you for your attention! 5 / 5