YEREVAN, May 27. / ARKA /. Armenia’s Central Bank said today it expects the demand for all types of loans to increase in the second quarter of the year. A Central Bank survey involving local banks and commercial organizations, found that the banks toughened lending terms in the first quarter of 2015.
A slowdown in economic activity and customer creditworthiness were named as two major factors behind the trend, the regulator said in a report on its fiscal policy.
“The Central Bank expects the demand for all types of loans to rise in the second quarter while a set of lending measures, to be carried out by the regulator are likely to help ensure that lending terms are not toughened further,” the report said.
According to the Central Bank, the overall lending to residents by Armenian banks has fallen by 3.6% this year to 2.015.2 trillion drams. The trend has been observed throughout the first three months of the year. Particularly, in January the total lending decreased by 1.9% from 2014 December, in February it was down 2.5%, and 3.6% in March.
The drop in lending was occurring against the background of dramatic weakening of dram in December 2014 and because of the Central Bank’s decision increasing banks’ reserve requirements. Due to the lack of dram liquidity some banks provided loans only to their customers, toughening the terms for others.
This situation has affected the cost of short-term loans. Particularly, interests on loans in drams repayable in 12 months and less grew by 2.85 percentage points to 19.11%. -0
