Republic of Kosovo attains BB- Credit Rating with Stable Outlook from Fitch:Sound Financial Sector and Prudent Policymaking of the Central Bank of the Republic of Kosovo Highlighted

20/04/2024

Kosovo achieves a significant milestone as it receives its inaugural credit rating of BB- with a stable outlook from a leading international credit rating agency "Fitch". The rating underscores Kosovo's robust financial sector and marks a pivotal moment in its journey towards financial progress with a positive impact for the economic development.

The credit rating agency's assessment highlights Kosovo's sound banking sector fundamentals, recognizing its resilience and stability amidst evolving global financial landscapes. Key highlights of the assessment include:

Sound Banking Sector Fundamentals: Kosovo's banking sector is lauded for its strong capitalization, with Tier 1 capital reaching 13.9% of risk-weighted assets by the end of 2023. Furthermore, the sector boasts a commendable return on equity of 19.9% and a liquidity coverage ratio of 2.8 times the regulatory requirements.

Foreign Ownership and Prudential Standards: With 84% of the banking sector's assets being foreign-owned, predominantly by EU banks, Kosovo's financial institutions benefit from robust prudential standards and international expertise. This foreign ownership bolsters the sector's stability and resilience.

Non-Performing Loans (NPL) Ratio: The NPL ratio is very low, further declining to 1.9% by the end of 2023, and is fully provisioned, indicating a healthy credit quality within the banking sector.

Nominal Credit Growth: Kosovo has sustained robust nominal credit growth, averaging nearly 15% over the last two years, indicative of a thriving credit environment supporting economic expansion.

Despite ECB policy hikes, Kosovo has demonstrated only a partial pass-through effect on deposit and lending rates.

This credit rating reaffirms Kosovo's commitment to fostering a resilient and dynamic financial sector, laying a solid foundation for sustained economic growth and development. The recognition of Kosovo's financial stability and prudent banking practices positions the nation favorably on the global economic stage.