Page 38 - Annual Report 2022

to utilize their authority delegated to restructure the level. Related to the effects that COVID-19 has had
uncollateralized loans in Branch Limit, to anticipate during 2022, we can say that in terms of operational
the impaired repayment ability of customers. risk it has not registered any material loss. The
events related to the most problematic issues have
RMG continued to play a pivotal role in identifying been followed up and respective measures have
and closely monitoring the key risks, designing and been taken. The geopolitical shock had no direct
offering our customers tailor-made and affordable impact on operational risk. If we refer to internal
recovery solutions in line with their situation, control measures on enhancing the risk mitigation,
expectations, and payment possibilities. Acting
proactively on the fundamentals of a close customer
follow-up, for specific old nonperforming customers,
a more specific approach is followed, while in cases
of exhausted efforts to retrieve the outstanding debt
or reach a payment agreement, legal procedures for
collateral enforcement are followed as the only way
to move forward with nonresponsive customers.

Amid the difficult year and a decreasing loan book,
BKT managed to considerably decrease the NPL
both in terms of ratio and outstanding amount, and
maintained its leading position among its peers for
nonperforming loan performance, with an NPL 90-
days ratio at 2.47% at the end of the year according
to IFRS.

During 2021 and 2022, inflationary pressures and
tightening monetary policies started to be priced into
financial markets by participants. These changes
affect the risk profile of the Bank, its financial
performance, and its capital position. To safeguard
the stability of the Bank, we followed a cautious
valuation and hedging of financial assets, responsible
investment allocation, and consolidation of the
liquidity reserve.
During 2022, operational risk remained at low levels.
We continued our efforts to develop an efficient
system for managing and measuring operational risk
through the maintenance of a historical database
of operational risk events, key risk indicators that
serve as early warnings and as measurements of
risk tendencies. The enhancement of the reporting
culture by all of the Bank’s employees remains a
priority for effective operational risk management.
In support of reporting, the internal regulatory
framework is subject to periodic revision along
with trainings conducted with new and existing
employees, in order to increase staff knowledge the focus is in information security, considering that,
on how to identify, manage, prevent, and report as of today, a cyber-attack is the most potential risk
operational risk events. The COVID-19 pandemic scenario and the most unpredictable one.
was still present during this year, but by enabling
all the electronic platforms through which BKT This year was challenging regarding cybersecurity
operates in the market, the Bank was able to serve its risks, which face not only Albania but the entire world.
customers and keep the pair “event-impact” at a low Just as the concept of war is changing, a parallel