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BANKING SYSTEM
Banking Services Sector: A frontrunner in Kosovo
Financial inclusion remains a continuous priority for the banking services sector in Kosovo, which can be achieved through financial literacy, product design, improvements in payments infrastructure and digitalization of services.
gradual, but consistent growth of the banking sector. In 2019, this trust was confirmed once again with a high growth rate in deposits, respectively a 16% annual growth. Total deposits reached over EUR 3.9 billion while the loans portfolio grew by 10% to EUR 3 billion.
Dr. Petrit BALIJA
CEO KOSOVO BANKING ASSOCIATION (KBA)
T
he banking services sector comprises the largest part of the Kosovo financial system. There are 10 commercial banks operating in Kosovo, representing over EUR 4.5 billion in assets, which have been growing steadily over the last two decades, since the building foundations of the financial system of Kosovo were set out in 1999. The banking services sector is a driving force and a frontrunner in the economic development of Kosovo.
Enterprise lending Access to finance for businesses is vital to the economy, because it allows for expansion and increase of capacities, human and otherwise, creating the right momentum for a business to thrive. Banks in Kosovo have played a pivotal role in the development of business corporations and SMEs in the country. This collaboration between enterprises and banks has not been developed without its challenges, considering that both financial system and private sector were established at the same time, some two decades ago. At the beginning, there
was a lack of credit history, lack of business assets, scarce qualified human resources and a deficient legislative framework. Nevertheless, banks found ways to support enterprises in Kosovo and provided the much-needed access to finance and a very reliable payments infrastructure, while investing in human resources and building impressive professional capacities. Loans to enterprises represents the largest portion of the total loan portfolio, at around 65%. There is a wide distribution of sectors of the economy that comprise the loan portfolio. Trade sector occupies the largest portion at 44% of total loans and leases, while the lowest extension of loans is to sectors in energy, mining and agriculture. However, the trend is towards a more balanced portfolio between different sectors. This is evident, because lending to trade has decreased from 52% in 2016
Deposits and lending Banks have created a high trust environment within the social and economic ecosystem in Kosovo. This high trust has allowed for a higher level of productivity and a April 2020
Bankieri
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