Loan demand in the banking sector increased in the second half of last year.
During the second half of 2023 (the period from July 1st to December 31st, 2023), banks report that they reviewed a total of 67,352 loan applications, an increase of 3.6% compared to the previous six-month period and 4.7% compared to the same period a year ago.
Of the total number of applications, 91% belonged to individuals, while 9% were for businesses (4% for large enterprises and 5% for small and medium-sized enterprises).
The distribution of loan applications shifted somewhat in favor of businesses, compared to the first half of the year, as well as compared to the second half of 2022.
Compared to a year ago, the increase in applications primarily came from the category of large enterprises, with a 19.5% increase, and from individuals, with a 4.5% increase.
According to the Bank of Albania, for the entire year 2023, new credit reached a record value of almost 319 billion lek, an increase of 14.5% compared to 2022.
Of the total applications received for consideration during the period, it turns out that about 21% of them were rejected by banks. This rate was 1.7 percentage points lower than six months ago but slightly higher, by 0.6 percentage points, compared to a year ago.
The decline in bank rejections in the second half of 2023 extended to all categories of clients but was more pronounced in the segment of large enterprises.
The rejection rate has been declining for both domestic and foreign banks, particularly towards the segment of large enterprises. It is noted that during the period, both banking groups have shown easing tendencies towards loan requests from large enterprises, rejecting only 4% of their applications in the case of foreign banks and 3% in the case of domestic banks. In the case of small and medium-sized enterprises, both banking groups have also been more accepting, rejecting only 6% of their loan requests. Regarding the individual segment, both groups have continued to have opposing stances, but with easing tendencies in the case of foreign banks. Thus, domestic banks rejected only 6% of individual applications, remaining at the same level as the previous period, while foreign banks rejected around 28% of applications, marking a 2-percentage-point decrease compared to the first half of the year.
Overall, from the analysis of the Bank of Albania, it is concluded that the trend of applications reviewed by banks during the second half of 2023 indicates a broad-based increase in loan demand, both from the individual sector and from enterprises, but also a somewhat easing stance on lending by banks.