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Armenian banks see their net profit for 9 months slash by 53 percent

YEREVAN, 21 October. / ARKA /. In the first nine months of 2015 Armenian commercial banks saw their net profits slash by 53.3% year-on-year – from about 13.130 billion drams to about 8.130 billion drams, according to ARKA news agency’s financial and economic bulletin “Banks of Armenia” (performance of Armenian banks in the third quarter of 2015).

Seven of 21 banks closed the third quarter with a total loss of 9.9 billion drams. In the first nine months of 2014 six banks posted a total loss of 3.6 billion drams. The banks’ profits began to fall in the second quarter of 2014 and the trend still goes on.

The banks’ total assets in January-September 2015 fell by 2.1% from the beginning of the year to 3.318.3 trillion drams. Their liabilities declined by 3.6% to 2. 807 trillion drams and their lending fell by 4.3% to 2.074 trillion drams. However, their capital increased by 7.2% to 511.3 billion drams.

The major drop in the banks’ performance indicators occurred in the first quarter of this year, when the impact of the sharp devaluation of the Armenian dram at the end of 2014 was still strong. Other factors affecting the drop in the banks’ profits are the overall economic situation, the regulators’ decision to raise the minimum total capital of banks and the risks in the financial market.

According to a Moody’s report in July, Russia’s recession and the decline in global oil prices will affect banks across six CIS countries in 2015-16, including Armenian banks, which will be affected moderately, reflecting the relatively modest devaluation in the dram, but its highly dollarized banking sector will face increased asset quality pressure if the dram continues to depreciate. -0-

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