YEREVAN, January 16. /ARKA/. The banking sector remains well-capitalized, with a strong liquidity, stable asset quality and subbed but positive profits, RAEX-Europe said. It said also it has confirmed the sovereign government credit rating (SGC) of Armenia at ‘BB-’ (sufficient level of creditworthiness of the government) in national currency and at ‘BB-’ (sufficient level of creditworthiness of the government) in foreign currency. The rating outlook is positive which means that in the mid-term perspective there is a high probability of upgrading the rating score.
It said as of November 2019, short-term debt accounted for 4.6% of total debt, 15% had floating interest rate and FX-denominated debt remained elevated at 78.6%; however, this type of debt remains mostly concessional.
RAEX-Europe said also as of October 2019, the regulatory capital to risk weighted assets was 17.5%, NPLs to total loans stood at 5.2%, ROA and ROE was 1.7% and 11.1%, while the ratio of liquid assets to demand deposits was 110.7%.
Domestic credit provided by financial sector to GDP is expected to rise by 4% in 2019 until 67% as total loans grew by 13% since the beginning of the year; it is mostly related to the household sector. As of November 2019, household loans grew by 27% while loans to non-financial corporations barely grew at 5% since the end of 2018.
The Central Bank of Armenia (CBA) has set additional capital buffers in the banking sector in order to be compliant with the Basel III regulation. Fully implementation of the new standards should positively impact banking sector stability. -0-
