Page 40 - Annual Report 2023

40 BANKA KOMBËTARE TREGTARE

steadily, as shown by the improvement of the ratio in 2024, as private consumption is predicted to slow
of nonperforming loans (NPL) to total loans, which down due to several growing risks in the coming year,
declined during 2023 to the lowest level of 5.07% (as stemming from internal factors such as increased
per end of November). climate risks and issues arising from the lack of labor
force due to high emigration, declining population, and
The annual inflation rate decreased from the highest high food prices.
level during 2022, 8.3% (Oct 2022) to the current
level of 4.00% (Dec 2023), marking the lowest During 2023, operational risk remained at low levels.
figure observed since February 2022 (3.9%). BoA We continued our efforts to develop an efficient system
resumed monetary tightening in November 2023 as for managing and measuring operational risk through
domestic inflationary pressures persist amid tight the maintenance of a historical database dedicated
labour markets. The 12-months Treasury Bonds yield operational risk events, key risk indicators that serve
followed a decreasing pattern during the first twelve as early warnings and as measurements of risk
months of 2023, from 5.58 % that has reached for tendencies etc. The enhancement of the reporting
the end of Dec’22 and resulted 3.43% (December 26, culture by all the Bank’s employees remains a priority
2023), remaining slightly unchanged from the previous for effective operational risk management. In support of
auctions. reporting, the internal regulatory framework is subject
to periodic revision along with trainings conducted
RMG continued to play a pivotal role in identifying and for new and existing employees, in order to increase
closely monitoring the key risks, designing and offering staff knowledge on how to identify, manage, prevent,
our customers tailor-made and affordable recovery and report operational risk events. Related to internal
solutions in line with their situation, expectations, control measures on enhancing the risk mitigation,
and payment possibilities. Acting proactively on the the focus is on Information security considering that,
fundamentals of a close customer follow-up, for as per today, a cyber-attack is the most potential risk
specific old nonperforming customers, a more specific scenario and the most unpredictable one. Reliance
approach is followed, while in cases of exhausted on third parties to perform bank’s critical tasks and
efforts to retrieve the outstanding debt or reach a processes continues to place significant elements of
payment agreement, the legal procedures for the control environments and risk exposure areas outside
collateral enforcement are followed as the only way to the direct control of organisations themselves thus
move forward with nonresponsive customers. we have a special attention relating outsourcing risk.
Mentioning the war in Ukraine, according to the EBA,
We continuously encouraged the Branches to direct exposures to Russia and Ukraine are limited and
utilize their authority delegated to restructure the they are not a fundamental threat to financial stability
uncollateralized loans in Branch Limit, so to anticipate but high level of uncertainty about the outcome of the
the customers impaired repayment ability. war and the potentially large impact on global and EU
economy is more worrying.
BKT managed to considerably decrease the NPL 90+
ratio as per IFRS to 2.08% at the end of the year from Following the current trend continues, the cyber-
2.47 % as per December 2022. While NPL according attacks in 2023 demonstrated an elevated
to BOA standards resulted 3.18 % December ’23 vs to level of sophistication and increased frequency.
5.07 % of the Banking System (November ’23). Geopolitically, nations may increasingly compare to
previous years, use cyber capabilities for strategic
Even though year 2023 has shown a positive influence and espionage, leading to a complex
performance, influenced by tourism, construction and landscape of cybersecurity challenges. In light of
the energy sector, the country’s economy is expected these developments, the significance of international
to slow down throughout this year. After a strong cooperation and regulatory frameworks is becoming
expansion in 2022, reaching 4.8%, Albania’s economic effectively to mitigate the evolving threats posed by
growth is expected to ease to 3.5% in 2023 and 3.1% cyber adversaries.