Financial Stability Report No1 20 December 2010 - Banka Qendrore ...

Number 1Financial Stability Reportthe same period of last year (Figure36). Whereas from total loans issuedto households, only 1.2 percent of theloans turned non-performing (1percent in June 2009). Based on thestructure of NPL, loans to enterprisesappear to be more problematic interms of repayment.The increase of NPL was evident in all 0the sectors of the economy. Though,June 2007 June 2008 June 2009 June 2010the quality deterioration was moreDoubtful Loss Totalpronounced in loans issued toconstruction and manufacturing Source: CBK (2010)sectors. NPL as a proportion of thetotal loans issued for the constructionsector rose from 1.5 percent in June2009 to 4 percent in June 2010Figure 36. NPL by sector9206.0%(Figure 37). At the same time, NPL for 9005.0%5.0%the manufacturing sector increasedfrom 7.5 percent to 9.7 percent. Thedecline in the quality of loans forthese sectors may be related to the8808608408208003.7%4.0%3.0%2.0%developments in the global economy1.0% 1.2%7801.0%as a consequence of the crisis. In this 7600.0%June 2009 June 2010context, increase in NPL forconstruction sector loans to someextent can be attributed to the lowerturnover in the property market ofTotal exposureSource: CBK (2010)NPL for households NPL for enterprisesKosovo, which to an extent might be attributed to the decline of purchases by Kosovoimmigrants. Also, the reduction of demand for Kosovo’s exports might have adverselyaffected the ability of themanufacturing industry to repay theloans, thus affecting the growth ofNPL in this sector. Themanufacturing sector represents themost problematic sector in Kosovo'seconomy in terms of loan repayment.A high level of NPL is recorded also inloans issued to the mining and energysector. Nevertheless, the exposure ofthe banking sector to these sectors isvery low. In June 2010, total loansissued to mining and energy sectorconstituted only around 2 percent oftotal banking sector loans.Figure 35. Structure of non-performing loans,in millions of euro70605040302010The definition of NPL, besides delays in the repayment of loans also takes into accountother factors related to borrower’s financial performance. The increase of NPL may reflect191231112839Figure 37. NPL by industryOther loansProperty and constructionFinancial servicesCommunicationServices, tourism andhospitalityManufacturingMining and energyAgricultureSource: CBK (2010)1.5%2.1%1.2%1.6%1.0%3.5%2.9%4.0%3.3%2.2%184.7%3.6%315.6%5.5%497.5%9.7%240.0% 2.0% 4.0% 6.0% 8.0% 10.0%12.0%3862June 2010June 200944 |