Mon, 7 July
28.1 C
Yerevan
USD: 384.11 RUB: 4.88 EUR: 450.45 GEL: 141.38 GBP: 522.39

Fitch negative outlook for Armenian banks reflects general things in country’s economy

YEREVAN, December 17. /ARKA/. Fitch Ratings’ negative outlook for Armenian banks reflects general things in the country’s economy, Samvel Chzmachyan, the chairman of the Union of Banks of Armenia, told ARKA News Agency.

“The Fitch outlook for Armenian banking sector’s prospects in 2016 was due rather to macroeconomic indicators than to problems inside of the sector,” he said.

Chzmachyan thinks the country’s slow economic growth had adverse impacts on the banking sector.

Among negative factors, he singled out western sanctions against Russia, which led to reduction of money transfers from Russia to Armenia. As the inflow of private money transfers dwindled, Armenian residents’ payment ability fell.

According to the National Statistical Service of Armenia, individual transfers contracted by 32.2% over the first ten months of this year, and those coming from Russia reduced 38%.

Chzmachyan said the share of lending to individuals is not small in Armenian banks’ aggregate loan portfolio.

The Central Bank of Armenia says loan extended to households totaled AMD 760.3 billion and made up 38.6% of the aggregate loan portfolio.

The head of the union also said that corporate clients, particularly exporters, faced difficulties as well.

Armenia’s exports shrank because the ruble’s devaluation against the dollar was more dramatic that that of the dram.

The population’s payment ability was stricken hard by these factors. “People faced difficulties in repaying their loans,” Chzmachyan said.

As a result, the share of nonperforming loans in banks’ loan portfolios grew and the quality of commercial banks’ assets worsened.

According to the central bank’s figures, the share of nonperforming loans in the banns’ aggregate loan portfolio rose to 8% in October 2015 from 6.7% in October 2014.

Besides, world prices for nonferrous metals dramatically sank striking hard at Armenia’s economy, since they make up one third of the country’s exports, Chzmachyan said.

“I think these outside factors will remain also in the next year, and therefore Fitch outlook is quite understandable,” he said.

But despite the mentioned difficulties, he said, Armenian banks are still liquid, since they became more cautious in lending money.

They don’t want to run such a risk of extending loans to everybody. They are now guided by principle ‘the less profit the higher repayment’.

At the same time, Chzmachyan said not everything in the Fitch outlook was negative, particularly the fact that 70% of Armenian banks’ foreign liabilities are long-term loans attracted from international institutional organizations and nonresidents affiliated to banks (parent banks).

“This allows the banks to reduce refinancing risks and prolong repayment deadlines,” he said. “Liquidity situation remains quite controllable also thanks to the central bank’s policy.”

The regulator says the Armenian banks’ liquidity indicator stood at 27.8% in October 2015, while in November 2014 it went down to 24-25%.

The central bank says Armenian banks’ aggregate assets have shrunk 2.1% since the beginning of this year to AMD 3 318.3 billion in September, liabilities have reduced 3.6% to AMD 2 807 billion and credit investments 4.3% to AMD 2 074 billion, while the banks’ aggregate capital has grown 7.2% to AMD 511.3 billion. Their profits totaled AMD 13 129.6 million in Jan-Sep 2015 against AMD 28 160.4 million in Jan-Sep 2014 – a 53.3% year-on-year decline. ($1 – AMD 483.66). —0—-

spot_img

POPULAR

Moody’s affirms Armenian government ratings at Ba3 with stable outlook

On June 26, 2025, Moody's affirmed the long-term issuer ratings in national and foreign currencies and senior unsecured debt in foreign currency of the Armenian government at Ba3, maintaining the stable outlook, the press service of the Ministry of Finance of Armenia reported.

Inflation of 3.9% registered in Armenia in June

In the consumer market of Armenia, 12-month inflation in June of this year amounted to 3.9%, according to the report of the National Statistical Committee (NSC) of Armenia.

Net loan portfolio of Armenian banks in Q1 2025 increased by 32.4% to AMD 6.424 billion

The loan portfolio of the Armenian banking system, net of reserves, increased by 32.4% in the first quarter of 2025 compared to the same period last year, amounting to AMD 6.424 billion.

Armenia takes first step toward regulating crypto assets

On Thursday, the National Assembly of Armenia approved in the second and final reading a draft law On Crypto Assets and amendments to a number of related laws.

Unibank pays AMD 7.8 billion dividends to shareholders

Unibank summarised 2024 with a profit of 8.2 billion AMD, of which 7.8 billion AMD will be paid for dividends - almost twice as much as the previous year. The decision was taken at the shareholders’ annual general meeting of “Unibank” OJSC.

LATEST NEWS

spot_imgspot_imgspot_img