Page 36 - Annual Report 2023

36 BANKA KOMBËTARE TREGTARE

RISK

MANAGEMENT

GROUP

The Risk Management Group (RMG) remained focused
on evaluating macro and specific developments during
2023 and also expectations for 2024. During 2023
banks have navigated well the adverse macro-financial
and geopolitical shocks of recent years. BKT sound
capital positions and liquidity buffers as well as lower
levels of non-performing loans (NPLs) have helped
the bank cope with the challenges stemming from the
coronavirus (COVID-19) pandemic and related supply
chain disruptions, Russia’s war in Ukraine and the
subsequent energy supply shock, as well as the recent
failures of US and Swiss banks events. The ability of the
bank to withstand severe economic downturn has also
been confirmed by the outcome of stress tests.

Inflation, interest rates and broader economic risks will remain front and center
for risk teams globally. Inflation decelerated nicely in 2023, faster than most
analysts thought possible without a recession. But the fight is not over. Central
banks will remain vigilant and will be swift to tighten monetary policy should
inflationary forces pick up again – even at the cost of a recession. As pandemic-
era stimulus fades, turmoil in global commercial real estate markets, fragilities
in the financial system and weakening consumer finances will weigh on global
economies in 2024. While the odds of a “soft landing” have increased in the
United States and many European nations, economies will remain vulnerable
to shocks throughout this transition period.