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Share of non-performing loans in Armenia’s banking system may increase from 6.7% to 10% – central bank

YEREVAN, December 16. /ARKA/. The share of non-performing loans in Armenia’s banking system may increase from 6.7% to 10%, Chairman of the Central Bank of Armenia Martin Galstyan said at a press conference on Tuesday.

He finds it too early to draw conclusions regarding repayment of bank loans, but banks as a whole have registered a problem, since the economic year began with the coronavirus, after which there was a war.

The country is still in limbo due to the expectations of the population.

“There may be problems with the repayment of loans, we keep the issue in the spotlight, we keep daily control over the banks and so far we estimate that non-performing loans may increase from 6.7% to 10%,” Galstyan said.

He stressed that there are concerns, but there are no significant risks in terms of financial stability, since the level of capital is high enough and it is sufficient to absorb all possible risks.

In general, he said, the banking system of Armenia is sufficiently capitalized and the risks are still within the boundaries of their absorption.

“Moreover, the banks will generally end this year with small profits and the system still contimnues its stable activity, based on the level of capital adequacy, both liquidity and profitability. Therefore, the banks will be able to absorb the risks within some period of time,” Galstyan said.

Speaking about deposits, the head of the central bank said sees no problems here, since there are also insurance instruments that will be used if necessary, but so far no such need has arisen. –0–

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