YEREVAN, July 22. / ARKA /. Reserve allocations made by Armenian banks for their increasing lending is one of the reasons behind a 13.6 percent decline in Armenian banking sector’s aggregate profit in the first half of 2014 from the same time span in 2013 to 17.8 billion drams, Ameriabank’s financial director Gevorg Tarumyan told a news conference today.
“It’s no secret that banking is now the most competitive business in Armenia, and some banks are trying to reduce their demands in relation to the risks that negatively affects their performance,” he said.
According to him, there was a slight decline in profit in the first quarter of this year, which increased to 13.6% in the first half. Moreover, some 5-6 banks are already operating with losses, he said.
On loan repayment, Tarumyan said the share of non-performing loans has reached 6-7 percent, which is a fairly high rate, because usually it was within 5%.
Tarumyan said also the share of non-performing loans of Ameriabank is below 3%, which is a significant improvement in credit quality and low redundancy.
According to him, the problem of bad loans could be resolved by collector organizations. “If this trend continues, and the market grows, then we may expect business proposals for the establishment of collecting organizations,” he said.
According to reports by banks for the first half, their undistributed profits as of June 30, 2014 amounted to about 17.8 billion drams against 20.6 billion drams in the same period in 2013 (down by approximately 13.6%). Of 21 commercial banks operating in Armenia in the first half, 15 banks worked with profits.
The other six banks incurred losses of 2.7 billion drams, up from 1.6 billion drams losses reported in the first half of last year by three banks.
Ameriabank CJSC is a universal bank offering corporate, investment and retail banking services in a comprehensive package of banking solutions. ($ 1 – 406.84 drams). -0 –
