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To create photo albums in the Photos app, tap the + button within the Albums page. Name the album and add photos by selecting them with a tap.
Once happy with the selection, tap Done to create an album. It can now be accessed from the Albums page as well.
If you want to delete an album, tap Edit and a minus icon will appear next to the album name, enabling its removal.
Note that only albums created on the iPad can be deleted, not those synced with a computer or created by iOS.