Albania’s banking sector recorded a decline in profits during the first five months of 2026, while lending activity, deposits, and capitalization continued to expand, according to data from the Albanian Association of Banks (AAB) based on statistics from the Bank of Albania.
The banking system’s cumulative net profit reached 12.17 billion lekë at the end of May 2026, down from 13.98 billion lekë during the same period a year earlier, marking a decline of around 13%.
The drop in profits was also reflected in banks’ profitability indicators. The return on equity (ROE) fell to 12.41%, compared with 15.35% in May 2025, while the return on assets (ROA) decreased to 1.27%, from 1.58% a year earlier. These figures indicate that banks are generating lower returns from their capital and assets, despite continued growth in overall activity.
Banking Assets Continue to Expand
Despite the decline in profitability, Albania’s banking sector continued to strengthen its balance sheet. Total banking assets reached 2.34 trillion lekë, representing an increase of approximately 9.8% compared with May 2025, when they stood at 2.14 trillion lekë.
The strongest growth was recorded in lending. The total loan portfolio expanded to 986.2 billion lekë, compared with 882.1 billion lekë a year earlier, an increase of around 11.8%.
Loans to individuals grew significantly, rising by approximately 17.9% to 397.2 billion lekë, while business lending increased by around 8%, reaching 589 billion lekë. The figures show that household borrowing remains the most dynamic segment of Albania’s banking market.
Deposits and Capitalization Strengthen
Deposits also continued their upward trend. By the end of May 2026, total deposits reached 1.89 trillion lekë, compared with 1.73 trillion lekë a year earlier, growing by about 9.8%.
Deposits from individuals increased by around 8.4%, reaching 1.48 trillion lekë, while business deposits grew by approximately 15.1%, reaching 417.3 billion lekë.
At the same time, banks continued to strengthen their capital base. Shareholders’ equity increased to 234.8 billion lekë, from 218.6 billion lekë a year earlier. The capital adequacy ratio improved to 20.44%, compared with 19.50%, remaining well above regulatory requirements.
Non-Performing Loans Continue to Decline
The quality of bank loan portfolios also improved. The ratio of non-performing loans (NPLs) fell to 3.77% in May 2026, compared with 4.12% during the same month of the previous year, confirming a continued improvement in asset quality.
The latest figures show that Albania’s banking sector remains on a path of expansion, with stronger lending, higher deposits, and improved capitalization. However, banks are facing pressure from slower profit growth and reduced profitability indicators as the normalization of interest rates affects lending margins.