By Adam Tanner and Benet Koleka TIRANA, May 10 (Reuters) - A sharp rise in non-performing loans in Albania may have peaked, the head of Albania's biggest bank Raiffeisen said on Monday, adding the local economy would slow, hit in part by woes in neighbouring Greece. Raiffeisen Albania chief executive Oliver Whittle told Reuters his bank had more non-performing loans than the national average of 11.7 percent in March but still expected to equal its 2009 profit of 35 million euros ($47 million) this year. "We're slightly above," he said. "We are absolutely scrupulous in the way we report so I am not surprised we are above the average." "If the economy stays as it is, it may well level off," he said of a rate that has risen from 7.6 percent in March 2009 and 4.1 percent in August 2008 before the start of the crisis. "We may be peaking now." The Austrian-based bank has about 30 percent of the deposits in Albania and 26 percent of the lending, taking a leading position after purchasing the state-owned savings bank in 2004. In a region where most countries experienced recession last year, Albania's economy grew 2.3 percent, a slowdown from 7.8 percent in 2008. The International Monetary Fund is forecasting 2.5 percent GDP growth this year, but Whittle is more pessimistic: "It think it will be zero." GREEK IMPACT Among the factors likely to hit Albania is the economic crisis in Greece, where 650-800,000 Albanians work. "It is bound to have an effect," the banker said. "Pretty soon we'll see a reduction in remittances." The Greek crisis has also complicated Albania's plans to issue 400 million euros in an inaugural euro-denominated bond in April, for which the parliament authorised an interest rate of up to 7.5 percent. With worse ratings than Greece, Tirana still hopes to complete the issue in coming days. "Seven and a half percent is not realistic in today's market," Whittle said. "It is obvious if you just look at the ratings and what is happening with the adjoining country." Raiffeisen made a 35 million euro profit in Albania last year and projects the same for 2010 after undertaking many cost savings measures over the past year, Whittle said. "Our ambition is to continue growing and we've grown," Whittle said of a bank with 103 branches and 1,400 employees. "Frankly, there are a lot of inefficient banks in Albania." On the long term, Whittle is optimistic about Albania's growth prospects, citing the potential of regional trade after infrastructure investment in recent years, mineral exploration, energy exports from hydropower and agriculture. He was more negative about tourism potential in a country that has a spectacular coastline along the Adriatic and Ionian Seas, citing a lack of facilities in resorts such as Saranda. "I don't think the country has its act together on tourism," he said.
"They are getting increasing cruise ships in Saranda; when they arrive it is a big disappointment." (Editing by Dan Lalor) ($1 = 0.7453 euro) Keywords: RAIFFEISEN ALBANIA/ (adam.tanner@thomsonreuters.com; +381 11 304 4903; Reuters Messaging: adam.tanner.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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