YEREVAN, January 26. / ARKA /. In 2014 Armenian banks earned a total of 27.1 billion drams in net profit, by 41 percent down from the previous year when this figure stood at 46.3 billion drams, according to ARKA news agency’s financial and economic bulletin “Banks of Armenia” for the last quarter of 2014.
Experts explain the strong decline in the banks’ net profit by their decision to build up their reserves for possible losses on loans. Other reasons behind the drop are the overall economic situation in the country, as well as financial shocks resulting from the devaluation of the Armenian dram, which lost 14 percent of its value in 2014 December.
Incidentally, despite the decline in net profits, the banks’ assets increased by 16% last year to over 3.4 trillion drams, as their liabilities grew by 18 percent to around 3 trillion drams, their credit investments surged by 21 percent to 2.162 trillion drams while their total capital stood at 488.7 billion drams.
The decline in the banks’ profit began in the second quarter of last year. Thus, in the first quarter their net profit grew by 6.74% from the year earlier, while in the first half it declined by 13.59%, falling further to 20.12% in the third quarter and to 41 percent in the fourth quarter.
Similar developments were reported in 2009, when due to the global financial crisis the Armenian economy contracted by 14%, which in turn slashed the banks’ profit by 48.4%.
However, the banks closed 2010 with high growth rates and their profits continued to increase until 2014. Thus, the Armenian GDP grew by 2.2% in 2010, by 4.7 percent in 2011. In 2012 it grew by 7.2%, falling to 3.5 percent in 2013. ($ 1-471.02 drams). -0-
