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Armenian banks report 6.7% drop in 9 months’ lending

YEREVAN, November 5. /ARKA/. The overall lending of 17 Armenia-based commercial banks fell by 6.7% or 279 billion drams in the first 9 months of 2021 to 3.9 trillion drams, Deputy Executive Director of the Union of Banks of Armenia  (UBA) Arman Sargsyan said at a press conference on Friday.

He said in the third quarter alone the lending dropped  by 0.7% or 26 billion drams.  According to him,  there are several  reasons behind the drop, such as sectoral economy reallocations, forced by the coronavirus pandemic, the war (in Nagorno-Karabakh conflict zone) and  the payment  holidays provided to borrowers by the banks due to the pandemic.

“As a result of all this, repayments began to slow down, and those payments that were supposed to be made in 2020 were  extended to 2021,’ he explained.

He said one of the economy sectors that saw a borrowing  growth is construction with lending to this sector increasing  by  20.8% in nine months. Also, mortgage lending surged by about 22% and 5.2% growth was also registered in ​​agricultural lending.

According to the Union of Banks of Armenia, construction sectors accounts for 9.3% of the total lending portfolio, mortgages – for 16.8% and agricultural lending – for 5.3%.

C​onsumer loans, which account for almost 24% of the total lending declined by 10.3%, lending to the industrial sector decreased by 18.19% (it accounts for 15.3% of the total), lending to trade dropped by  9.9% (its share in the overall lending is 13.7%), lending to services fell by  5.7% ( 8.3% ), lending to the financial sector fell by 29.2% ( 6.1%) and lending to  transport and communications declined by 9.3% (3.4%).

Sargsyan said that 43% of the loan portfolio are loans provided to individuals (AMD 1.679 trillion), and 47% are loans provided to economic entities (AMD 1.838 trillion) and 10% are interbank loans worth 446 billion drams. -0-

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