Annual Report 2010 03 August 2011 - Banka Qendrore e ...

CBK
Annual Report 2010
securities contributed with 7.7 and 3.5 pp, respectively, to the growth rate of total assets in
2010, while the balance of commercial banks with the CBK contributed negatively with 1.3
pp during the same period (Figure 8). The gradual recovery of the global economy from the
last year financial crisis has increased the confidence of commercial banks, which was
reflected in a faster increase of loans and, at the same time, in a decline of commercial
banks’ reserves at the CBK. The share of banking system assets to GDP increased to 59.7
percent in year 2010, marking an increase of 2.7 pp compared to the previous year. The
activity of commercial banks that operate in Kosovo’s banking market is highly
concentrated in the financial intermediation activity inside the economy, while 19.7 percent
of total assets are invested in the external markets.
Lending activity continues to represent the main activity of Kosovo’s banking system. In
2010, lending activity was characterized with a faster growth trend, compared to the
previous year, when lending marked a slowdown. In 2010, total banking sector loans
amounted at euro 1.46 billion, reflecting an annual increase of 13.2 percent compared to the
increase of 8.9 percent in 2009 (Table 4). In the end of 2010, loans accounted for 59.4 of
total banking system assets (58.5 percent in 2009).
Table 4. Structure of banking system assets
Description
2007 2008 2009
2010
In millions of euro Participation (%) In millions of euro Participation (%) In millions of euro Participation (%) In millions of euro Participation (%)
Cash and balance w ith CBK 189.0 13.2% 218.2 12.1% 322.7 14.6% 307.5 12.5%
Balance w ith commercial
banks 208.1 14.5% 283.9 15.7% 405.6 18.4% 439.0 17.9%
Securities 78.9 5.5% 40.5 2.2% 97.0 4.4% 173.4 7.1%
Loans and leasing (gross) 892.1 62.2% 1,183.4 65.4% 1,289.0 58.5% 1,458.7 59.4%
Fixed assets 27.2 1.9% 39.0 2.2% 43.1 2.0% 44.1 1.8%
Other assets 39.7 2.8% 43.1 2.4% 46.7 2.1% 32.5 1.3%
Total 1,435 100% 1,808 100% 2,204 100% 2,455 100%
Source: CBK (2011)
Due to the slowdown of lending activity, in 2009, commercial banks diverted a part of their
investments towards the external markets, namely in investments in securities. These
investments continued to grow also in 2010, driven mainly by the recovery of the
international financial markets during this period. Investments in securities amounted at
euro 173.4 million in 2010 (euro 97.0 million in 2009), increasing their share to total assets
to 7.1 percent (4.4 percent in 2009). This represents the highest share of securities to total
banking sector assets since 2006. The structure of banks’ investments in securities mainly
consists of investments in government bonds (83.1 percent), financial corporations (16.7
percent) and non-financial corporations (0.2 percent).
ii. Structure of loans
The recovery of the word economy and, consequently, the improvement of banks’
perceptions on the domestic economic environment were reflected in a higher growth rate of
loans in 2010 compared to 2009. In 2010, loans extended to the domestic economy
amounted euro 1.46 billion, which is an annual growth of 13.2 percent compared to the
growth rate of 8.9 percent in 2009 (Figure 9). Loans to households continued to have the
highest growth, marking an annual increase of 25.5 percent. Loans to enterprises continued
to grow at lower rate compared to household loans. Nevertheless, the annual increase of 8.7
percent indicates a faster growth rate of loans to enterprises during 2010, compared to the
previous year.
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