IFRS reporting, banking sector profit up 27% for 6-month 1*

Preliminary data from the Albanian Association of Banks show that the profits of the banking sector according to International Financial Reporting Standards (IFRS) maintained a positive trend even for the second quarter of the year.

The figures reported by the banks show that the progressive net profit at the end of the six months reached 13.2 billion Lek, an increase of another four billion Lek compared to the end of the first quarter. The profit of the banking sector is also at higher levels compared to the same period a year ago, with 27% more.

The result reported with IFRS standards often has significant differences in what is calculated according to the local standards of the Bank of Albania. According to local standards, the profit of the sector until the end of the 5th month resulted in an annual decrease of 29%. The differences are mainly related to different methods followed for calculating reserve funds and mitigating credit risk. However, IFRS are the legal standards of financial reporting and the main reference for the performance of the banking sector.

Out of 12 banks in the sector, 11 of them were profitable at the end of the first 6 months.

In absolute value, BKT continues to have the highest profit, with 6.1 billion Lek or 52% more compared to the same period of the previous year. However, the high result of BKT came mainly from a shift in the portfolio of securities during the first quarter of the year, while in the second quarter the profit suffered a significant decrease.

After BKT, Raiffeisen ranks second by a large margin, reporting a net profit of 2.4 billion Lek, an annual increase of 11%.

The last bank that reported profits above the limit of 1 billion Lek is OTP Albania, with 1.5 billion Lek, an increase of 73% compared to last year. However, the profit of OTP Albania will be corrected with the negative result of Alpha Bank, which for the 6 months was the only bank that reported a loss, for 176 million Lek. The acquisition of Alpha Bank by OTP was finalized on July 18 and it is expected that the merger between the two banks will be completed by the end of this year.

The ranking of profits continues with the American Investment Bank (ABI Bank), with 933 million Lek, Intesa Sanpaolo, with 635 million Lek, Credins Bank, with 625 million Lek, Union Bank, with 564 million Lek, Tirana Bank, with 406 million Lek, Fibank, with 355 million Lek, ProCredit Bank, with 82 million Lek and the United Bank of Albania (UBA), with 78 million Lek.

If we compare the results of the banks in terms of return on equity (RoE), the most profitable bank is OTP Albania, with a return level of 28.84%. Followed by BKT with 25.01%, ABI Bank, with 18.53%, Union Bank, with 17.55%, Fibank, with 17.25%, Raiffeisen, with 16.1%, and UBA, with 13.57%. Other banks, except Alpha Bank, report positive returns in the single digits.

Most banks have reported higher profits and returns compared to the same period in 2021. This shows that, so far, high inflation and rising interest rates have had a limited impact on the performance of the sector.

IFRS reporting, banking sector profit up 27% for 6-month 1*

1* Taken from ‘Monitor Magazinehttps://www.monitor.al/raportimi-me-ifrs-fitimi-i-sektorit-bankar-ne-rritje-me-27-per-6-mujorin/


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