YEREVAN, November 4. /ARKA/. Adverse outside factors have fueled growth of Armenian banks’ lending risks and have stricken at their profitability, the Central Bank of Armenia says in its financial stability report for the first half of this year.
Among the macroeconomic risks seen in the first half of this year, the central bank singled out some fall in activity of Armenia’s key economic partners and contraction of money transfers and volumes of exports.
“At the same time, the central bank’s stress tests show that Armenia’s banking sector is still marketable and capitalized, and this makes it possible neutralize impacts from risks,” the regulator says in its report.
Outside risks impacting Armenia’s financial stability remained in the first six months of this year and their impacts grew.
In particular, world prices for nonferrous metals went down, demand for main exports from Armenia subsided and the inflow of transfers dwindled. This slowed down domestic consumption and economic growth.
These developments have stricken at households’ income and consumers lending.
The central bank says in its report that continuing stress tests at banks, it has applied some regulating prudential instruments to curb lending risks.
Banks’ profitability has been driven down by bad loans and the lower interest margin. “As a whole, signs of growth of risks were seen in the financial sector, but these risks are controllable and the financial system is able to resist some variety of risks,” the regulator sys in its report. —–0—
