The value of loans written off by the banking sector increased for 2025.
According to data from the Bank of Albania, last year banks wrote off around seven billion lek worth of bad loans, 192% more than a year earlier. Around 85% of the value of the written-off loans belonged to businesses.
Since January 2015, when regulatory requirements for taking bad loans off balance sheets began to be implemented, banks have written off around 90 billion lek of bad loans.
The write-off of bad loans in the banking sector began to take on a large scale in 2015, when the Bank of Albania imposed a regulatory obligation to write off loans classified as bad for more than three years. The write-offs had a very significant impact on reducing the banking sector’s non-performing loan ratio, which at that time had reached 25%.
Taking a bad loan off the balance sheet is an accounting action, which does not imply giving up on collecting it through legal means.
The write-off is done with the aim of reducing the banks' problem loan ratio, but it does not have any impact on their financial performance, because loans classified as lost are 100% provisioned even before their write-off from the balance sheet.
In an effort to encourage further portfolio cleaning, the Bank of Albania in 2020 decided to shorten the deadline for writing off bad loans to two years, from three years previously.
The non-performing loan ratio fell to 3.8% last year, from 4.2% at the end of 2024, hitting its lowest level in 16 years.
According to the Bank of Albania, this performance was particularly influenced by the faster growth of the total loan stock compared to the performance of non-performing loans.
Banks reported improved portfolio quality for short-term loans, foreign currency loans, and loans to businesses.
With the exception of business development loans, all other loan portfolios by purpose have shown quality improvement.
At the group level, non-systemic banks have a lower rate of non-performing loans ratio compared to the group of systemically important banks (Banka Kombëtare Tregtare, Credins, Raiffeisen and Intesa Sanpaolo). The non-performing loans ratio for non-systemic banks in December 2025 was 3.4%, for systemic banks 4.3%, for European banks 3.2% and for Albanian banks 4.7%.
At the end of 2025, most banks recorded a non-performing loan ratio between 2% and 3%.
In value, the stock of non-performing loans reached 36 billion lek at the end of last year. Within this portfolio, an expansion of the stock of non-performing loans classified as "doubtful" was observed, which was balanced by a contraction of non-performing loans classified in the "substandard" and "lost loans" classes.
