Page 16 - Annual Report 2022

CEO MESSAGE

Dear Stakeholders:

As stated in my message of 2021 annual report, we anticipated high volatility
in bond investments, which volatility we aimed to minimize. It turned out that
2022 was the most volatile year for bonds on record, and bond portfolios
globally lost value to unprecedented levels. However, we managed to contain

our losses by properly hedging and immunizing our bond portfolio against
adverse interest rate movements. That helped us reach a net profit figure
of USD105 million (2021: USD93 million), an all-time high, which represents
about 40 per cent of the banking system’s profit. As a result, and in line with
our sustainable dividend policy, we paid a dividend of USD50 million (2021:
USD45 million) to our shareholders.

Although the transition has not been painless (yet it could have been worse),
the move to normalcy from the zero-interest absurdity of many years is

welcome for prudently-run banks. The so-called “deposit franchise” is strong
in Albania, especially for BKT as the largest and oldest commercial bank, and
a harbinger of bigger net interest margins. Higher spreads are also likely to
find their way into loans, especially commercial and retail, where we will be
more active in 2023.

The recent regional banking turmoil in the US as of the writing, proves that
the additional capital and liquidity requirements imposed on systemically

important banks do serve a purpose and the associated costs to such banks
do not go to waste. Systemically important banks are safer by design, as
they are asked to spend more (both in absolute and proportionate terms)
on safety. As the largest bank in Albania, we are happy and proud to be the
leader of this group.

A unique combination of quality staff and a strong, well-capitalized and liquid
balance sheet are what give us confidence to achieve the demanding targets
of 2023.

Kind regards,

SEYHAN PENCABLIGİL

CEO AND BOARD MEMBER