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Armenia’s Central Bank denies media reports that financial stability of banks is at risk

YEREVAN, June 25. /ARKA/. Armenia’s Central Bank has denied today media reports alleging that the financial stability of the country’s banking system was at risk.

“Some Armenian media outlets reported in their stories about what they described as ‘alarming processes’ in the banking system of the country. The Central Bank states that there is nothing to endanger the financial stability of the banking system and these rumors are baseless and inconstant with reality,” it said in a statement sent to ARKA.

The Central Bank said the capital adequacy indicator of the banking system in the first quarter of 2013 was 16.4%, and for the past 5 years all commercial banks met the minimum capital adequacy requirement, which is 12%, while the minimum level recommended by the Basel Committee is 8%.

The Central Bank reported also that the proportion of non-performing loans in the total loan portfolio of commercial banks at the end of the first quarter of 2013 stood at 5.2%. It said also that despite the fact that this indicator increased slightly compared to the end of 2012, it is still far from being considered risky. For comparison, this indicator for Eastern European banks is 20%.

According to the Central Bank, in terms of liquidity level Armenian banking system is not threatened at all. The share of liquid assets in the total assets and current liabilities at the end of the first quarter amounted to 26.1% and 136.1% respectively, while the minimum levels are 15% and 60% respectively.

“The stability of the banking system helps to ensure continued lending to the economy,” it said.

Armenia currently has 21 commercial banks. Their total assets at the end of the first quarter of 2013 amounted to around 2.6 trillion drams, which was 6.3% more than at the end of the fourth quarter of 2012; the loan portfolio during the reporting period amounted to 1. 7 trillion drams, which was 20. 5% more than in the previous quarter. -0-

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