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Bad assets at Armenia’s banks continue growing – Bagrat Asatryan

YEREVAN, September 10. /ARKA/. Bad assets at Armenia’s banks will continue growing, Bagrat Asatryan, a former head of the Central bank of Armenia, said in an interview with ARKA News Agency.

According to the central bank’s figures, the share of nonperforming loans in Armenian banks’ aggregate loan portfolio reached 9.2% in June 2015 after growing 0.1% over one month. This is a quite high indicator. For comparison, the share of nonperforming loans was 6.1% in June 2014.

«I think we are coming up to the red line – it means this problem will grow to the scale that will make it not only banks’ problem,» Asatryan said adding that a program able to remedy the situation is needed.

«Not one measure, but a package of measures is needed to recover the banking sector. However, the government turns a blind eye to this trouble and things have already aggravated. Our banking sector is now working with losses because of the deteriorating quality of assets.»

Asatryan said that decline is already recorded on some general indicators it will continue until rehabilitation processes begin in the country’s economy that is in need of structural changes.

He is convinced that the old model that once had worked and produced certain results is now exhausting and it has no future.

«Our economy is tied closely to Russia’s economy, and therefore developments in Russia will have impacts on Armenia,» the economist said in his interbiew. «Russia’s economy is badly weakened. Its growth first of all depends on oil prices, and their fall strikes hard at the Russian economy. The oil price $100 per barrel is a forgotten fairy tale and nothing like that is expected for the next 10 or 20 years. As a result, adverse developments will be seen in Russia’s economy and society.»

The regulator says the last precipitous growth of nonperforming assets was seen amid the global recession in 2009.

Analysts say borrowers, especially SMEs, are failing now to repay their loans, and this is the banks’ biggest trouble.

Complicated things in Armenia’s economy are aggravating the problem. –0–

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