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Share of non-performing loans of Armenian banks grows to 7%

YEREVAN, June 4. /ARКА/. The share of non-performing loans of Armenian banks reached 7% in April 2021, the chairman of the Central Bank Martin Galstyan told reporters on Thursday.

According to him, in 2020, credit risks grew in almost all types of lending with the share of low-quality loans increasing significantly.

He specified that the bulk of low-quality loans are consumer loans, followed by business and agricultural loans. As for mortgage loans, borrowers are more responsible, making their regular payments, he added.

“As a result, by the end of 2020 the share of low-quality loans increased significantly, reaching 7% in late April, 2021,” Galstyan said.

According to him, while maintaining interest income, credit losses of the banks increased, in connection with which rather moderate growth rates of the loan portfolio are expected. As a result, banks’ incomes from lending have significantly decreased.

He said the bulk of the loans – about 66.7% – are business loans, 23.7% are mortgages, 7.1% are agricultural loans, and 2. 5% are consumer loans.

“Compared to the beginning of the year, in April 2021, there was a certain rise in lending – about 5-6% compared to the beginning of 2020, however, these figures were lower than in previous years,” Galstyan said.

At the same time, he noted that the number of loans in foreign currency decreased, and those in Armenian drams increased.

As for deposits, according to him, there was a drop in deposits since September 2020, and a recovery has been observed since the beginning of 2021, the main outflow occurred in October-November 2020, which was associated with the war in Nagorno-Karabakh and economic uncertainty in connection with the coronavirus.

“However, as of May, 2021 the level of deposits has practically recovered and returned to the pre-war level,” Galstyan said. ($1 – 520.22 drams). –0–

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