YEREVAN, November 25. /ARKA/. The banking sector is well-capitalised but profitability is low and loan growth remains high, at 15.4% yoy at September-end 2019, boosted by mortgage loan and consumer lending, Fitch said in a report.
It said this partly reflected a decrease in the informal economy, higher household real income and increased risk appetite from banks given pressures on profitability.
Asset quality is strong, however, with non-performing loans (from one day past due, as per the CBA classification) accounting for 5% of total loans. Dollarisation is still high at 50% of deposits and credit, despite the recent introduction of targeted macro-prudential measures.
External financing risks are mitigated by the precautionary Stand-By Arrangement of USD248million signed with the IMF in May 2019 and support from official creditors. The government issued a 10-year USD500million Eurobond in September with a 4.2% yield and bought back 80% (USD400million) of the Eurobond maturities coming due next year, hence removing short-term refinancing risk.
According to the central bank of Armenia, the total capital of Armenian banks in the first 9 months of 2019 increased by 6.2% yoy to 818.6 billion drams. Their assets amounted to 5.395 trillion drams, having increased by 8.7% or 432 billion and their overall liabilities amounted to 4.576 trillion drams, having increased by 6.4% or 192.9 billion drams in the third quarter. ($ 1 – 476.15 drams). -0-
