Banks offer more loans to individuals than businesses

Banks offer more loans to individuals than businesses
 If you’re an individual and go to a bank to apply for a loan, than you should know that it would be easier for individuals to be given loans rather than private businesses. This is confirmed by the experts of the Bank of Albania. According to them, last year, banks were more eager to offer loans for individuals rather than companies. “In contrast to businesses, banks have offered more loans to individuals and this trend continued in the third quarter of this year”, they say in the latest report on the loans for the third quarter of 2018.

They explain that the criteria applying on individual loans were fewer than the ones applied in the previous quarter. “So, banks have become less stringent with regards to loan collaterals, but they have kept the maximum loan maturity unchanged”, experts explain. Meanwhile, according to them, things differ when it comes to the amounts that banks are ready to lend individuals. Figures show that the amounts that banks have offered to individuals in the form of loans have been lower than before. “The amounts of the loans appear to be smaller than the previous quarter”, experts of the Bank of Albania explain. Meanwhile, according to them, “at the end of the third quarter of last year, individual loans accounted for 12.1% of Gross Domestic Product, the same as a year ago”. Experts also explain that “this portfolio’s performance seems relatively stable”, making it clear that banks are not reluctant in offering individual loans.

Individuals want to borrow in lek, businesses in euro

In contrast to private businesses who want to borrow in the European currency, individuals are more inclined to borrow in the domestic currency, lek. “At the end of the third quarter, loans in the domestic currency accounted for 61.5% of individual loans. Compared to a year ago, this ratio has increased by 2.8%”, central bank experts say, explaining that in the long run, demand for individual loans in the domestic currency is expected to increase even more.

“We’re seeing that individuals are becoming aware of the fact that loans in lek are better than those in foreign currency, because they are not exposed to the threats coming from fluctuations in the exchange rates”, experts further explain.

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