YEREVAN, May 27. /ARKA/. The portion of non-performing loans in Armenia’s commercial banks was 6.8% in 2014, as compared to 4.5% in 2013, said Andranik Grigoryan, the head of financial system stability and development at the Central Bank of Armenia (CBA).
Despite the increase, this level is still lower than in many other countries, including European countries, he said.
Non-performing loans grew in almost all economic sectors, he said.
According to Grigoryan, several factors contributed to a relatively high level of non-performing loans in the country: lending accounted for about 60-61% of banks’ assets, the loan terms in 2014 were much weaker and there were no problems with attracting loans.
Yet, the banking system is well able to neutralize these risks due to high capitalization levels, Grigoryan said.
Even under negative scenario Armenian banks will face no financial stability problem as their reserves are sufficient for making up for losses, according to the expert.
The Central Bank of Armenia says loan investments by Armenian commercial banks fell by 5% from the beginning of this year to 1,893.7 billion drams as of the end of March.
The portion of non-performing loans rose by 1.3 percentage points to 8.3% of the loan portfolio of Armenia’s banking sector. According to assessments, this is quite a high level, compared to 6% non-performing loans recorded in March 2014. ($1 – 479.9 drams). -0-
