the banking and financial system in the recent years, and should feed your confidence in the albanian economy in the future. these prospects will further benefit in the framework of albania's membership process in the european union and from the agenda of structural reforms. 1 / 4 bis - central bankers'speeches for this reason, i kindly invite you to stand up for these processes. also, i invite you to maintain your positive approach to expand financing to the albanian economy in addition to qualitatively increasing the banking products in a quantitative manner. * * * dear ladies and gentlemen, year 2022 as well triggered some unexpected shocks for the banking sector ( the war in ukraine, fluctuations in markets of financial instruments and recently the increase in interest rates ). the banking sector, despite the lingering effect of these shocks on the profitability rate, re - affirmed once more the stability and the security this sector provides to depositors and investors. throughout 2022, the activity of banking sector recorded a prudential increase across all indicators, above 6 % growth of total assets and similar expansion rates in main items. the funds of individual depositors, who preferred the foreign currency as the main instrument of their savings, largely underpinned this upturn. the financing manner of credit portfolio and the upsurge in the foreign currency investments in securities reflected the ample supply in foreign currency. the amount of non - performing loans reduced again this year, by around all 2 billion, thus strengthening the stability of this multi - year trend, further down to 5 %, from 5. 68 %. in 2022, the portfolio of financial instruments - unlike the previous years - provided a negative contribution to the overall level of banking system profitability. the interest rate hikes and the uncertainties caused by the war in ukraine yielded subsequent shocks to the market values of these portfolios. banks succeeded in withstanding the first wave of these shocks, remaining at positive territory, in terms of both system level and individual level. meanwhile, measures are gradually being taken to adequately manage investment portfolio, in line with the established conditions. capitalisation of the banking system has continued to grow this year as well, to 19. 26 %, from 18. 53 %, reflecting also the enhancement in the regulatory requirements on macroprudential reserves and the minimum requirements for own funds and eligible liabilities ( mrel ). both elements have strengthened the resilience and security of the banking system. the purchasing and then the merger of the otp bank with

meetings and forums with national and international partners and homologue. the structure of re - pricing credit portfolios, which are dominant in our banking system, has enabled banks to begin to transfer this effect to borrowers, while the relatively high share of non - interest bearing accounts on the liability side has provided for the increase of interest margins, at least temporary. but the increase of credit cost bears the risk of non - performing loans growing in the future, so far as borrowers'solvency has not proportionally increased with the price upsurge. the development of abilities to foresee and assess in an objective manner the solvency of the existing clients a€ “ without being inclined to fast and short - term profits, which may harm an already established long - term relationship - will be one of the main challenges in the next year. second, requirements on capital ( macro - prudential buffers and requirements on regulatory capital instruments and eligible liabilities ) will continue to increase in 3 / 4 bis - central bankers'speeches compliance with the regulatory provisions and the respective gradual application programme in 2023. the implementation of these measures, beyond the approximation of our regulatory framework with the eu acquis, ensures a stronger resilience of banking system against the above - stated shocks, and the continuation of the provided financial services, already being integrated in the daily life of citizens and businesses. the consolidation of banking system and the increase in the number of banks with a high share in the banking system impose differentiated addressing of the latter for mitigating systemic risks and the effects on the taxpayers'money in case of possible crisis in the future. concluding, i take the opportunity to re - assure that the bank of albania, in carrying out its function as supervisor and regulator, will continue to support you and be your partner both in good and rainy days, by providing transparency, cooperation and objective assessment of your requests and proposals in every decision making. i wish you a successful and prosperous new year! 4 / 4 bis - central bankers'speeches