YEREVAN, October 21. / ARKA /. In the first 9 months of 2015 the total capital of Armenian banks increased by 7.2% to 511.3 billion drams, while their assets decreased by 2.1% to 3.318.3 trillion drams, according to ARKA news agency’s financial and economic bulletin “Banks of Armenia.”
The growth of the total capital in the reporting period resulted largely from a 9.43% increase in their authorized capital. This trend was observed also in 2014, when seven banks increased their authorized capital by a total of 10.6%.
It should be noted that for many years in a row the local banks saw their assets grow by an average 15-20% a year outpacing significantly the growth of their capital, which grew by 5% a year.
However, the ongoing economic slowdown does not allow the banks to expand at previous rates.
Since 2014 the growth rate of bank assets began to slow down, and in 2015, when the Armenian national currency began losing its value, the growth rate of banks’ assets began to decline. The reduction of assets is most clearly reflected in the banks’ loan portfolios. Thus, in the first 9 months of 2015 their credit investments fell by 4.3%.
Prompted by these developments the Central Bank of Armenia in late 2014 decided to increase from January 2017 the minimum total capital of commercial banks to 30 billion drams from the current 5 billion drams. According to some experts, as a result of the currently 21 commercial banks there will remain only 15.
This made the banks to seek for additional sources of financing- some at the expense of their shareholders, and some others announced IPOs. This suggests that the banks’ capital is on the rise again. ($ 1 – 472.99 drams). -0-
