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

Annual Report 2010
CBK
40 |
Liquidity indicators for the Kosovo’s banking system constantly have shown a satisfactory
liquidity position. The faster
growth of loans relative to deposits
during 2010 led to a higher loan to
Figure 17. Banking system loans and deposits, in
millions of euro
2500
88%
deposit ratio, which in December
86%
2010 reached at 75.3 percent 2000
84%
82%
compared to 73.9 percent in 2009
80%
1500
78%
(Figure 17). Despite the increase,
76%
1000
74%
the current ratio between loans and
72%
deposits is in accordance with the
500
70%
recommendations of the CBK,
68%
0
66%
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
which recommends that
2008 2009 2010
commercial banks operating in
Kosovo should have a loan to
deposits ratio of around 80 percent.
Loans
Source: CBK (2011)
Deposits Loans-deposits ratio (right axis)
At the same time, the increase of the banking system liquid assets to total assets ratio
shows a slight improvement of liquidity in the banking system. In December 2010, liquid
assets accounted for 37.5 percent of total banking system assets, which is an increase of
0.15 pp compared to the previous year.
The structure of liquid assets in
the Kosovo’s banking system is
composed of cash and balance with
CBK, balance with commercial
banks abroad and investments in
securities (Figure 18). In the end
of 2010, assets under the category
Figure 18. Liquid assets, in millions of euro
500
450
400
350
300
250
200
150
100
‘cash and balance with CBK’
50
reached at euro 307.5 million, 0
which is a decline of 4.7 percent
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
2007 2008 2009 2010
compared to December 2009.
Cash and balance with CBK
Balance with commercial banks
Whereas, the category ‘balance
Securities
with commercial banks’ mainly Source: CBK (2011)
consists of assets invested in
placements to banks operating abroad by banks operating in Kosovo. In December 2010,
this category had a value of euro 439.0 million, which represents a growth of 8.2 percent
compared to the same period of 2009. During 2010, banks continued to increase
investments in securities abroad, a trend that started since year 2009. In December 2010,
banking system assets invested in securities reached at euro 173.4 million, which
represents an annual growth of 78.8 percent compared to December 2009. The satisfactory
performance of financial markets globally was a key determinant that encouraged banks to
increase investments in securities. Also, the slowdown credit growth within the country
contributed to the increase of investments in securities by increasing the availability of
assets to be invested in the external markets.
ii. Credit risk
The reflection of the global crisis in Kosovo during 2009 has had an impact on borrowers’
solvency, thus affecting negatively the quality of banking system loan portfolio. In 2010, in
spite of the fact that Kosovo’s economy was estimated to have marked a higher growth rate