Capital Growth and Profit, Second-Tier Banks 2018 – 2022

Open Data Albania has conducted a research on capital growth and earnings performance of second-tier banks operating in Albania.

In the period under review, active banks operating in the country have been reduced from 14 at the end of 2018 to 11 in 2022. This reduction in number has come as a result of the merger and absorption of banks or liquidation at the will of shareholders in one specific case.

Table: Number of Active Banks at the end of the year, 2018-2022
Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

The signed bank capital at the end of 2022 marks the value of about ALL 93 billion. The 5-year period under analysis shows a downward trend in capital value. The greatest contraction of total bank capital occurs in the last two years, 2020 and 2021, corresponding to ALL 4.8 billion and ALL 8 billion respectively. In 5 years, bank capital shrinks by about 12%, more specifically by  ALL12.4 billion.

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

In a glance at the bank level, Tirana Bank is the only commercial bank that has reduced its capital in this period by ALL 5.2 billion, about 47%. Whereas, the bank that has scored the highest level of growth in 5 years is Procredit Bank rwith around 52% increase in capital, followed by Union Bank with around 43% growth and Credins Bank ranked third with a 33% growth. United Bank of Albania  (UBA) and American Bank of Investments (ABI), turn up with a 26% and 12% increase in capital from 2018, respectively.

Table: Capital by Second Tier Banks 2018-2022
Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

As for the increased capital value, Credins has seen a rise, scoring the top position for nominal growth with a plus of ALL 2.9 billion. Whereas, Procredit and Union, have fallen by one position, resulting in a capital growth of only ALL 2 billion and ALL 1.1 billion respectively.

Raiffeisen Bank, OTP Albania, Intesa Sanpaolo Albania, National Commercial Bank (BKT) and First Investment Bank – Albania (Fibank), have not undergone a change in the capital size during the research period.

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

Table: Capital by Second Tier Banks 2018-2022
Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

To analyze the profit of the second tier banks, two indicators were examined: Profit/Loss before interest and tax (EBIT), which shows the value of the operating profit of a company, without deducting interest and fiscal tax obligations; as well as the rate of return on the employed capital (ROCE) that shows the efficiency in the use of the company’s capital and is calculated as the ratio between EBIT and the capital employed (employed). The subscribed capital of the bank is part of the total employed capital. Employed capital is calculated as the difference between total assets and liabilities.

A high ROCE indicator shows that the company is generating more profit for each Lek invested, as a result of the efficient use of capital employed by the company.

In 2021, EBIT in the second tier banking market will reach the value of ALL 20.7 billion. The bank with the highest level of profit is BKT with a profit value of ALL 8.7 billion. The second ranked bank with the highest profit before tax and interests is Raiffeisen with 4.2 billion ALL, followed by OTP Albania with a profit value of ALL 2.3 billion. Procredit has emerged with the lowest profit with only ALL 76.5 million. UBA is the only bank with a loss for 2021, where the gross loss is in the amount of ALL 51.7 million.

Over 80% of the total profit of the second tier banking market is shared between BKT, Raiffeisen, OTP Albania and Credins.

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

In a 4 year frame, the difference throughout the years is dynamic. A more stable change in EBIT is shown by Fibank, Intesa Sanpaolo Albania, Credins, BKT and Banka Union. In four years, the total profit before tax and interests in the second tier banking market has increased by 71%, about ALL 8.6 billion.

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

If we refer to the 3 banks with the highest share in the total profit of the banking market in 2021, BKT in these 4 years has a stable profit fluctuating in the range of ALL 7.8 – 9.5 billion. Specifically, in 2021, there is a decrease of ALL 837 million in profit (8.8%) compared to 2020. Raiffesien Bank, after two years of EBIT decline in 2019 and 2020, in 2021 has increased profit by ALL 2.1 billion. Also, OTP Bank Albania has experienced an increase in profit in 2021 by ALL 1.4 billion.

Table: EBIT indicator, Annual Differences, Second Tier Banks, 2019-2021
Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

As for the ROCE indicator, OTP Albania results with the highest rate of efficient use of capital, around 20%. This shows that in 2021, for every 100 ALL invested in capital, it turns out that OTP Albania generates ALL 20 as operational income. In second place with the highest rate of ROCE is Banka Union with a rate of 18.4% followed by BKT with an efficient capital utilization rate of 18%. In 2021, only UBA results in a negative value of ROCE, which indicates a deterioration in the use of invested capital.

Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

Seven of the eleven active banks in 2021 produced a positive ROCE every year during the 2018-2021 time frame, indicating that the second-tier banking sector exhibits efficient use of capital.

Table: ROCE indicator in Second Tier Banks 2018-2021
Source: National Bussiness Center, Open Corporates Albania
Comments and Analyses: Open Data Albania

The data for this article were taken from the Extracts of the National Business Center (NBC), as well as the official websites of the second-tier Banks. Passports of Business Companies licensed as Second Tier Banks can be accessed in the Open Data Platform Open Corporates Albania.

Download excel: Capital Growth and Profit, Second-Tier Banks 2018 – 2022
Comments and Analyses: Open Data Albania
Contributed by: Pajtim Nikolli
Translated by: Rezarta Cushaj