The Central Bank of Austria notes that the concentration of banks is higher in Albania, Kosovo and North Macedonia, with about 60% of assets held by the three largest banks, while in other Balkan countries, about 40% of assets held by the three largest banks.
In the periodic report on banks in the region, the Central Bank of Austria states that the general situation of the banking sectors in the region is estimated to be good. Banks are generally in good shape, profitable. Banks' capitalization exceeds regulatory requirements so far, while the banking sector in the Western Balkans is generally profitable.
Moreover, banks' liquidity is high and deposit-to-credit ratios have remained below 100% in most countries.
Financial intermediation in the economies of the Western Balkans is quite moderate, where credit to the economy in relation to GDP varies between 34% in Albania and 50% in Montenegro. Overall, financial intermediation has not changed significantly since 2015 and on average has not expanded more than GDP.
Overall, from 2015 to the first quarter of 2020, credit growth to the private sector was stronger in Kosovo, with an average annual growth rate of about 10%, while the weakest credit growth was in Albania, with only 1%, where credit initially fell and recovered only in 2019.
Due to the increased uncertainty from COVID-19, loans have slowed in most economies in the region since the beginning of the year, especially in Bosnia and Herzegovina, as well as in Kosovo. In contrast, Serbia has recorded stronger credit growth, especially for corporations.
Credit quality has increased in all countries of the region, although non-performing loans remain quite high in Albania and Bosnia and Herzegovina. The high level of credit in euros remains problematic in these countries, despite the de-euroization strategies they have followed.