YEREVAN, June 11 /ARKA/. Armenia-based commercial banks have provided $900 million worth loans in 2019, which was instrumental to secure 9.2% growth for the first 4 months of 2019 as opposed to the same time span in 2018, the head of the Union of Banks of Armenia Artak Hanesyan said today, speaking at the annual meeting of shareholders of Ararat Bank.
He said the country’s banking sector has proved over the past 10 years that it is able to withstand numerous challenges, having ‘survived’ two global world financial crises and even last year’s ‘velvet revolution.’
According to him, the sector’s assets and loan portfolios have increased this year by an impressive 16% compared to the same period in 2018.
“Net lending reached about $900 million, having given a strong push to private investment and consumption, and contributing also to high economic activity of 9.2% in the first 4 months of 2019,” Hanesyan said.
According to him, this numbers indicate high level financial stability of the banking sector, its accountability, transparency and compliance with international criteria.
He also said the sector’s challenges are related to the need to ensure the implementation of the Basel-3 standards and to ensure the continuation of capital adequacy, technological re-equipment of banks, and ensuring sufficient profitability amid high competition.
“For many banks, the capital adequacy ratio does not exceed 16%, and given the expected Basel-3 buffers to ensure subsequent growth, banks are going to face the need to replenish their capital,” said Hanesyan.
As for profitability, according to him, the average net profit to equity ratio is 8.3%.
“Over the past 10 years, banks have provided financial instruments worth tens of billions of US dollars to the Armenian economy, attracted several billions of dollars from international financial institutions to finance various sectors of the economy and create many new jobs,” said Hanesyan.
In the first quarter of 2019, economic growth in Armenia was 7.1%, the rate of economic activity in April was 9.2%. -0-
