YEREVAN, February 13. /ARKA/. Bank lending growth rates in Armenia exceeded the growth rates of deposits (21.1% and 10.8% y/y, respectively) by the end of September 2024, contributing to the reduction of excess liquidity in the banking sector, the Eurasian Fund for Stabilization and Development (EFSD) regional economic review “Winter 2024-2025” says.
“As a result, the difference between the volume of deposits and loans in the first 9 months decreased to AMD 89 billion from AMD 527 billion at the end of 2023,” the review says.
Analysts point out that banks’ lending remains elevated despite the persistence of high interest rates on local currency loans.
“As of end-September 2024, year-on-year growth in commercial bank loans accelerated by 1.7 pp, to 21.1% y/y, driven by a 27.6% y/y increase in mortgage loan issuance (vs. 22.6% y/y growth in June).
The growth was mainly driven by an increase in the issuance of loans in local currency (the contribution amounted to 15.9 p. p.),” the review says.
The contribution of loans in foreign currency, excluding the exchange rate factor in the total growth was 5.8 p.p..
“The share of mortgage loans (21.7%) and construction loans (10.4%) remains at a high level against the background of the planned suspension of the government’s program on compensation of interest payments on mortgage lending in 2025-2027 (for Yerevan in 2025),” the review says.
The review also states that against the background of continued high credit activity and increased probability of possible risks in the financial market in Q3, the Central Bank of Armenia decided to raise the countercyclical capital buffer rate from 1.5% to 1.75%.
According to the regulator’s data, the volume of mortgage loans extended by Armenian banks to Armenian residents in AMD amounted to AMD 1.32 trillion in December 2024 against AMD 1.26 trillion in November of the same year and against AMD 947.8 billion in December 2023.
At the same time, the volume of consumer loans in December last year amounted to AMD 1.34 trillion against AMD 1.25 trillion in November of the same year and against AMD 987.8 billion in December 2023.
The total volume of loans issued by Armenia’s banks in December 2024 amounted to AMD 6.4 trillion against approximately AMD 6.15 trillion in November of the same year and AMD 5.15 trillion in December 2023.
At the same time, the total volume of deposits attracted by Armenian banks in December 2024 amounted to AMD 6.46 trillion against AMD 6.18 trillion in November of the same year and AMD 5.68 trillion in December 2023. ($1 – AMD 396.42) -0-.
