For Monitor Magazine, 24th of April 2023
How would you rate the performance of the National Commercial Bank during the past year? What were the most important developments in your bank and more broadly in the activity of the Albanian banking system?
2022 was the years of records for BKT, we have reached highest profit figures ever which is almost half of the sector average according to IFRS standards, with low level of NPL from loans. Total assets have grown 8.4% (in real terms/exchange rate adjusted) and it reached to 4.6 billion USD. Bank capital has reached 474 million USD and almost 28% of the Albanian banking sector. BKT has followed its sustainability strategy which has 3 main pillars: to strengthen its strong deposit base as the “symbol of trust of the country”; focusing on retail and commercial lending besides with vigilant standing in corporate loans and efficient asset liability management to mitigate risks/volatilities and maximize profit. Strong growth of 12.9% reel in deposit collection and a growth in retail lending in nominal terms with 21%, in line with the strategy. Wisely managed assets and diversified portfolio with proper hedging mechanism and strong capital structure have produced record profit for the bank and even for the country. We could differentiate our bank in positive manner from the sector in terms of profitability and loan performance.
BKT has kept its pioneer and leader role in digital banking and card business to help transformation of Albanian banking market. We have renewed our mobile banking application BKT Smart totally, fully touch screen cash deposit ATM network Smart BanKomaTs expanded. Card and POS usage has drastically increased.
Last year, the economy faced the highest inflation in two decades and a rapid rise in interest rates. How were these developments reflected in the performance of the banking sector?
Inflation is a critical factor decreasing purchasing power of households and negative effect on cost structure of companies diminishing their profit margins. In line with FED and ECB, BOA has decided to increase interest rate to keep inflation under control to decrease consumption and incentivize savings. This action is also affecting the loan interest rates besides installment amounts and financing amount in line with the purchasing power of households or income statement of companies. It has not been negatively reflected to NPL rates during 2022 but increasing interest rates and lower profit margins can affect some companies and it may increase non-performing loans, banking sector should be more vigilant.
What will be your main objectives for 2023 and what do you expect to be the main challenges for the banking business this year?
BKT’s objective is always to be a sustainable bank with strong financial figures, a bank that supports not only our customers with qualitative products and services but contributes on the economic growth of the country. We will continue our steady asset growth, focus on the increase of lending towards both individual and business customers, further increase deposits and payment business keeping in the same time our risk diversification strategy.
Digitalization remains one of our top priorities through which we aim to give the best user experience to our customers. We are engaged not only to provide innovative solutions with the latest technology but educate them on the usage and further more reward them with pricing incentives.
Increase in interest rates may further decrease in lending demand which is already in low levels and it will be a challenge for the banking sector. If non-performing loans mainly from companies may increase, banks should be more careful to analyze financials of the companies while they are financing. Even they should closely follow up the business customers to take precautions on time.