Tirana Times, January 15, 2026 – Albania’s banking sector enters 2026 with growing caution, as banks operating in the country anticipate an increase in non performing loans despite strong demand for credit. According to the latest CESEE Banking Lending Survey conducted by the European Investment Bank for the second half of 2025, banks in Albania expect a moderate deterioration in asset quality and continue to report weaker profitability compared to most regional markets.
Although credit demand remains strong, driven by businesses and households, banks are tightening their risk assessments. Institutions expect NPLs to rise due to the slowdown in several key sectors, higher operating costs for firms and persistent structural vulnerabilities in the economy that could affect borrowers’ repayment capacity. Albania is among the markets where banks foresee a slight worsening of credit quality, in contrast with more stable expectations in several other CESEE economies.
Despite elevated demand, banks are adopting a more conservative approach to lending, prioritizing portfolio stability. Profitability continues to lag behind regional averages, influenced by the small size of the market, pressure on interest margins, intense competition and a credit structure still concentrated in lower value added sectors. These factors keep returns below those reported in Central Europe and parts of the Western Balkans.
Even in this context, the Albanian market remains considered relatively attractive. Banks cite macroeconomic stability and medium term growth prospects, noting that lending volumes could expand further if structural risks ease and the business environment improves. The central challenge for Albania’s banking system remains balancing credit expansion with prudent risk management in an economy still heavily dependent on consumption and public spending, while private investment and productivity continue to underperform.
Regionally, the CESEE survey shows improving credit dynamics, with strong loan demand and early signs of an easing in credit supply conditions after a period of tightening. Banks express greater willingness to expand lending to SMEs and consumer segments, while remaining cautious toward large corporates and mortgages. This shift could help narrow the gap between strong demand and constrained supply observed in recent years.
Two thirds of cross border banking groups surveyed plan to expand their long term presence in the region. In Albania, credit demand has continued to rise even as supply conditions tightened, a trend expected to persist. Liquidity and loan quality have improved overall, although banks still anticipate a moderate increase in NPLs in the coming months.
EIB Vice President Marek Mora described these trends as encouraging for investment across the region, while Debora Revoltella, head of the EIB’s Economics Department, highlighted that regulatory developments and international factors continue to weigh on lending conditions.
Access to funding remains strong, supported by rising retail and corporate deposits and sustained financing from international financial institutions. Loan quality has improved notably in both retail and corporate portfolios, though banks remain cautious for the period ahead.
The overall picture signals that while Albania’s banking sector rests on solid foundations and holds medium term potential, rising credit risks combined with subdued profitability continue to constrain performance.
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