ardian fullani : achievements and challenges of the albanian banking system speech by mr ardian fullani, governor of the bank of albania, at the reception for the bankers and representatives of banks operating in albania, organized by the albanian association of banks, on the occasion of the closing year 2008, tirana, 18 december 2008. * * * dear chairman of the albanian association of banks, dear managers of the albanian banking system, thanking you for this invitation, i avail myself of this opportunity to provide some considerations of the path we have been through during 2008 and the challenges ahead us. what we have been through during this fall sounds unreal and somewhat unbelievable. many taboos have overturned and the list of news enlarges day after day, including also schemes of financial mega - fraud. i commenced my speech this way so as not to overlook this unusual global event, to provide an outline of the general economic and financial setting surrounding our environment and above all, to underline an immense truth : that the albanian banking system has shown admirable resilience and that the immunity shown has not only been a matter of luck. the year 2008 has been an intensive year of ceaseless changes, at the centre of which were the safeguard and consolidation of macroeconomic stability at home and the banking system ’ s financial stability. taking a quick glance at the albanian economy over the present years, i can state that it has maintained the projected growth for year 2008, under stable consumer prices and domestic currency exchange rate. monetary policy has been throughout the year 2008 cautious and has kept the key policy rate unchanged at 6. 25 percent. in addition, fiscal policy has been characterized by the collection of budget revenues beyond the government ’ s projections and by the concentration of expenditures in mainly infrastructure - related projects. as in the recent years, the banking system has sustained the economic activity and consumer demand with loans, hence providing numerous incentives for a stable economic growth. the positive performance of the economy and of certain economic sectors – in particular trade and construction – has been propelled by the positive rates of domestic demand at home. lending has maintained its high annual growth rates of 42 percent. as a share of gdp and the system ’ s assets, loans have recorded further growth to 36 percent and 41 percent, respectively. businesses were the main banking loans ’ users, accounting for 66 percent of loan portfolio growth. this positive performance was associated with a favourable macroeconomic and financial setting. during the second half of the year, the cpi has recorded an

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