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Fitch ratings: Russian presence in Armenian banking sector poses moderate risk

YEREVAN, March 21, /ARKA/. Russian presence in the Armenian banking sector poses a moderate risk, Fitch ratings said in a press release.

«A sole Russian bank accounted for 5% of assets as of 1H21, but relies primarily on local funding, and its operations currently do not appear to be affected,’ the ratings agency said.

Non-residents accounted for over 22% of total banking system deposits (or 11.7% of GDP) as of January 2022, but Fitch believes the risks of large-scale deposit flight is currently limited.

The sector has historically suffered from low profitability (the net interest margin was 4% in 2021), but asset quality is solid (non-performing loan ratio of 1.7% as of January 2022), capitalisation is high (the Tier 1 Capital Ratio was 15.6% as of January 2022), and liquidity is strong (31.8% of total assets and 123.6% of short-term liabilities as of November 2021). -0-

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