The drop in profits was also reflected in banks’ profitability indicators. Return on equity (ROE) declined to 12.41%, from 15.35% in May 2025, while return on assets (ROA) fell to 1.27%, compared with 1.58% a year earlier. These figures indicate that banks are generating less profit per unit of capital and assets, despite continued growth in their overall business activity.

At the same time, the banking sector’s balance sheet continued to expand. Total assets reached ALL 2.34 trillion, up about 9.8% from ALL 2.14 trillion in May 2025.

The strongest growth was recorded in lending. The loan portfolio increased to ALL 986.2 billion, up from ALL 882.1 billion a year earlier, representing annual growth of around 11.8%. Loans to individuals rose by nearly 17.9% to ALL 397.2 billion, while business lending expanded by around 8% to ALL 589 billion. The figures suggest that household lending remains the most dynamic segment of the banking market.

Deposits also continued to grow. At the end of May, total deposits stood at ALL 1.89 trillion, up from ALL 1.73 trillion a year earlier, an increase of approximately 9.8%. Household deposits rose by around 8.4% to ALL 1.48 trillion, while business deposits increased by about 15.1% to ALL 417.3 billion.

Meanwhile, the banking system further strengthened its capital base. Shareholders’ equity increased to ALL 234.8 billion from ALL 218.6 billion a year earlier, while the capital adequacy ratio improved to 20.44%, up from 19.50%, remaining well above regulatory requirements.

As for asset quality, the non-performing loan (NPL) ratio declined to 3.77%, down from 4.12% in May last year, confirming the continued improvement in the quality of banks’ loan portfolios.

The data show that Albania’s banking sector continues to expand lending, deposits and capitalisation, while facing slower profit growth and lower profitability indicators, as the normalisation of interest rates continues to put pressure on banks’ margins.