The Governor of the Central Bank of the Republic of Kosovo, Mr.Fehmi Mehmeti said that during 2019 the sectors under the responsibility of the CBK have performed well.
At the closing press conference, Governor Mehmeti announced that this year the banking sector continued with high credit growth, improved conditions for private sector access to credit, and increased financial sustainability.
According to Governor Mehmeti by the end of October 2019, banking sector loans have reached the value of 2.98 billion euros. Annual credit growth remains high at an annual rate of 10%, while the main source of financing for the banking sector continues to be deposits, the amount of which during this period amounted to EUR 3.75 billion, which represents a very high annual growth of 16%.
“Interest rates on loans continued downward trend, decreasing to 6.5% from 6.6% as they were in the same period last year, reflecting continued improvement in market conditions, and facilitating access to bank financing. It should be particularly emphasized very good quality of the loan portfolio with a rate of nonperforming loans of only 2.1% in October 2019, which continued to decline compared to last year when it was 2.7%. The pension funds sector was also characterized by favorable developments. The value of pension sector assets in September 2019 amounted to 1.92 billion euros, marking an annual growth of 8.8%. The return on investment of pension funds was quite satisfactory, where during the period January to September were invested 138 million euros, showing an increase in the value of citizens' pension savings. Another important sector of the financial system is the sector of microfinance institutions and non-bank institutions, which is continuing to accelerate the pace of lending. The total value of loans of this sector in October 2019 amounted to euro 217.1 million, marking an annual growth of 22.2%. During this year, effective interest rates decreased from 23.1% to 20.3%. The insurance sector continued to increase insurance activity, as well as compensation for damages to the insured. The total written value of premiums by insurance companies as of September 2019 was 74 million euros, representing an annual increase of 7.1%.
On the other hand, the value of claims paid amounted to EUR 37.9 million, marking an annual increase of 7.3%. The ratio between claims paid and premiums received reached 51.2%, compared to the same period last year when this ratio was 51.1% ”, said Governor Mehmeti, adding that the CBK is continuously committed to ensuring the proper treatment of claims by insurance companies.
Governor Mehmeti also mentioned the decisions taken by the CBK in order to maintain financial stability in the country.
In order to ensure financial stability and as a result of non-compliance with regulatory requirements and failure to comply with remedial measures, CBK in 2019, in its role of regulator and supervisor of financial institutions, has revoked license of company "Insig" JSC, Kosovo Branch.
Also, in order to protect the damaged parties from the third party liability insurance and in order to create the necessary conditions for the sustainable development of the insurance sector, CBK has adjusted the Category I tariffs for compulsory third party liability insurance, which have been unchanged since 2001.
Recently, as you are informed, CBK revoked the licenses for two institutions: MFI “Iute Credit Kosovo” Sh. A. and NBFI “Monego” , which over the years of operating in our market, have consistently deviated from their business plans, on the basis of which they obtained licenses to operate in Kosovo, thus bringing something to our market other than what they had promised they would bring.
Regarding this process, we are seeing different forms of public pressure on these decisions, but we would like to reiterate that the CBK has acted in full compliance with its legal mandate and are convinced that our action is fair, therefore, no form of public pressure cannot lead to a review of these decisions. We fully respect the right of the parties to pursue legal ways to appeal these decisions, and we urge the parties affected by these decisions to pursue legal ways. We are ready at any time to testify and clarify the basis on which we have made these decisions, ”the Governor said.
He said that the Central Bank of the Republic of Kosovo continues to act in support of the sustainable development of the financial system, providing the necessary legal infrastructure to support the development of financial institutions and at the same time ensuring financial stability.
Harmonization of the regulatory framework with the latest international developments in this field, more specifically in the European Union, has continued to be an important priority of the CBK this year as well, whereby various regulations have been drafted which advance different aspects of banking regulation and in particular that of corporate governance of banks.
One of the areas where the CBK has had a major focus has been consumers protection, for which there has been an increased commitment to protect the rights of consumers of financial services, thereby directly serving the protection of the public interest.
Also, this year CBK has advanced financial education programs and applied corrective measures to financial institutions in order to protect consumers. This area will continue to be a top priority in the coming year as well.
Governor Mehmeti has announced that based on preliminary assessments , economic growth for 2019 is expected to be around 4.2%, an increase largely supported by increased investment and improvements in net exports.
A similar pace of economic growth, according to CBK forecasts, is expected in the coming year as well.
The average of annual inflation rate until November 2019 has increased by 2.8%, compared to the 0.9% rate in the same period last year. The increase in inflation rate this year is mainly a result of rising food prices.
Also, the CBK shared the prize "New Economist", where based on the evaluation committee first prize was awarded to Jeton Shatri, for the study entitled "Factors that Influence Employee Satisfaction: A Study of Private Banking Sector in Kosovo", while the second prize went to Blina Zhubi for the study entitled: "The Effects of electronic transactions with a focus on combating informality: Trends of realizing electronic transactions in Kosovo".