Trends of the health of the banking system and creditors in 2025 and early 2026

The performance of the balance sheet of monetary institutions during the period January 2025 – January 2026 indicates a banking system in steady expansion, where growth rates are balanced and supported by real financial intermediation factors.

Month	Total Assets (mln ALL)	Loans (mln ALL)	Broad Deposits (mln ALL)	Loan-to-Deposit Ratio (LDR)	Capital-to-Assets Ratio
Jan 2025	2,186,781	904,986	1,397,416	64.76%	10.49%
Apr 2025	2,164,591	943,911	1,375,536	68.62%	10.65%
Jul 2025	2,226,154	968,352	1,406,304	68.86%	10.58%
Jan 2026	2,349,362	1,021,476	1,506,292	67.81%	10.51%
YoY Change	+7.43%	+12.87%	+7.79%	+3.05 pp	+0.02 pp

The total asset growth of +7.43% is not merely a quantitative expansion, but reflects a gradual deepening of the role of banks in the economy, particularly in the second half of 2025 when the dynamics accelerated significantly.

In this context, it clearly stands out that bank lending is the most dynamic component of the balance sheet (+12.87%), significantly outpacing the growth of deposits (+7.79%). This differentiation is crucial: it shows that banks are not passively holding liquidity, but actively transforming it into financing for the real economy. As a result, the share of loans in total assets rises to around 43.5%, signaling an increase in financial intermediation – a key indicator for financial market development.

However, this growth is not accompanied by liquidity pressures. On the contrary, the loan-to-deposit ratio (LDR) remains low, in the range of 64.8% – 68.6%, one of the most conservative levels in the region. This is a strong signal of stability: banks still have considerable room to expand lending without relying on costly or unstable funding sources. At the same time, capital maintains a stable ratio of around 10.5% of assets, confirming that balance sheet expansion is supported by strong capital bases rather than excessive financial leverage.

From the perspective of credit structure, developments are even more significant. Although businesses (non-financial corporations) remain the main recipients of credit (~50% of total), their growth rate is relatively moderate (+7.9%). In contrast, households and other resident sectors show a much faster growth (+18.5%), becoming the main driver of credit expansion. This structural shift suggests a reorientation of lending toward consumption and real estate, as well as toward the financing of small businesses.

This development has dual implications. In the short term, the increase in household lending directly supports consumption and domestic demand, contributing to economic growth. At the same time, it may stimulate sectors such as construction and real estate. However, in a longer-term perspective, this trend requires monitoring, as rapid growth in consumer and mortgage lending may increase exposure to cyclical risks, particularly in the event of an economic slowdown or tightening monetary conditions.

Another element reinforcing the stability outlook is the behavior of deposits. Their steady growth (+7.79%) reflects a high level of confidence in the banking system, providing the main funding base for banks. The absence of strong fluctuations or sudden withdrawals strengthens the perception of a stable and trustworthy system. This is further supported by the fact that exposure to complex instruments such as derivatives is minimal, while exchange rate effects remain contained.

From the perspective of creditors, mainly depositors, the picture is clearly positive. High liquidity and strong bank capitalization create a solid protective buffer for deposits, significantly reducing systemic risk. At the same time, the lack of reliance on short-term external financing or international markets limits exposure to external shocks.

In macroeconomic terms, the observed developments suggest that the banking system is playing an active role in supporting the economy. Credit expansion, especially toward resident sectors, is a clear signal of monetary policy transmission and increased financial intermediation. However, the divergence in growth rates across credit segments suggests that the structure of economic growth may increasingly rely on consumption rather than large productive investments.

In summary, the overall picture is clear:
The Albanian banking sector appears strong, liquid, and well-capitalized, with balanced growth and no immediate signs of risk.
Financial intermediation is expanding, supporting economic activity.
The main potential risk is linked to the acceleration of household lending, which requires attention to avoid the buildup of vulnerabilities in the future.