Algeria: The National Audit Office warns about the increase in non-performing loans at Local Development Bank (BDL)
In its 2023 annual report, the National Audit Office has raised concerns about the Local Development Bank (BDL) in Algeria, specifically focusing on its management of non-performing loans.
As of the end of 2021, BDL reported non-performing loans totaling 364.29 billion dinars, constituting 33.5% of the total gross customer loans outstanding.
These outstanding receivables primarily consist of overdue payments, posing challenges for the bank’s recovery efforts and negatively impacting its financial position.
The report underscores a persistent increase in bad debts as a percentage of total gross loans outstanding from 2019 to 2021, particularly noting elevated rates of bad debts associated with subsidized schemes and private businesses.
Bad debts in the private sector, categorized as complex disputes detrimental to the bank, represent over 30% of commitments in this sector.
The National Audit Office identifies shortcomings in the collection services, attributing the difficulties to inadequately defined tasks and responsibilities, along with deficiencies in internal organization.
Furthermore, debt collection is not sufficiently integrated into the bank’s information system.
While temporary measures have contributed to improved financial results for BDL in 2020 and 2021, the report emphasizes that these actions alone will not be adequate to address internal structural weaknesses, especially given the surge in classified receivables necessitating substantial provisions.
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Pedro OKALAMAR
