PRESS RELEASE
Decisions by the Supervisory Council, 4 September 2024

On 4 September 2024, the Supervisory Council of the Bank of Albania reviewed and decided to:

• Approve the Financial Stability Statement and Financial Stability Report for 2024 H1

The Financial Stability Report is an important periodic document prepared by the Bank of Albania whose main purpose is to identify and assess risks to the financial system and its infrastructure. The Financial Stability Statement, whose half-yearly release is a legal requirement set out in the Law “On the Bank of Albania”, prefaces the Report.

The Bank of Albania deems that in 2024 H1 (hereinafter ‘the period’), the financial system maintained its positive trajectory. Despite the mitigating effect of the exchange rate appreciation, deposits in the banking sector increased and the credit growth rate accelerated. Risks related to the activity were presented at controlled levels, but the upward trend of the financial cycle requires moderation. Overall, the resilience of the banking business to risks was good, in a context in which the capitalisation of the business remained stable and the profit continued to improve at a satisfactory pace.
 

Economic developments during the period were positive, affected by the good performance of consumption and investments, and particularly by the stability of the tourism performance. [1]Economic growth is  followed by the increase of both employment and wages and fall of unemployment rate. The financial situation of households and businesses is estimated to have improved during the period. Fiscal policy maintained a consolidating trend under the significant growth in fiscal revenue. Inflationary pressures continued to decline and the inflation rate fell below the Bank of Albania's target, leading to the reduction of the policy interest rate.

Risks regarding the economic and financial developments in Albania remain present. They mainly arise from the uncertainty that geopolitical developments entail, but they can also develop in conditions of optimism accompanied by imprudent actions by economic operators.

It is therefore estimated that all economic agents have the opportunity to use this period of activity to consolidate their financial balances, to improve administrative capacities in general and risk in particular, as well as to increase the efficiency of their activity.

The Supervisory Council was also informed on the daily functional and operational activities of the Bank of Albania.

^[1]This sentence refers to labour market data for Q4-2023