The Bank of Albania’s Supervisory Council approved the Financial Stability Statement and Financial Stability Report for the second half of 2024, assessing that banking activity remained sustainable with contained risks, and also approved its half-yearly report on banks’ compliance with the minimum requirement for regulatory capital instruments and eligible liabilities (MREL). The Financial Stability Report notes that deposits and lending expanded despite the dampening effect of exchange rate appreciation, capitalisation remained at good levels, and profitability improved considerably. While the banking system is assessed as resilient, challenges are considered to be edging up, with banks expected to use improved financial performance to strengthen risk management infrastructure. The report also links the supportive domestic backdrop to growth in consumption and investment and strong tourism, alongside falling unemployment, rising employment and wages, a broadly consolidating fiscal stance supported by revenue growth, and declining inflationary pressures that led the Bank of Albania to ease monetary policy; it highlights continued risks from uncertainty and international spillovers and the importance of preserving financial buffers. On MREL, the Council’s report finds that, as at end-2024, all banks subject to the requirement met the intermediate target of 18.2%, with MREL capacity at 22.9% and Common Equity Tier 1 instruments dominating the structure. The final MREL target is expected to be met by 2027, at 24.9%.

Original source View in tracker