Sat, 4 October
19.1 C
Yerevan
USD: 382.76 RUB: 4.67 EUR: 449.25 GEL: 140.62 GBP: 514.85

Head of Central Bank explains why banks do not lower lending rates following cuts in refinancing rate

YEREVAN , March 18. /ARKA/. The head of the Armenian Central Bank Martin Galstyan explained why banks do not lower lending rates in response to the reductions of the refinancing rate.

On March 18, the Central Bank Board left the refinancing rate unchanged at 6.75%. This was the first time since June 2023 that the refinancing rate has remained unchanged. From June 2023 to February 2025, the refinancing rate was reduced from 10.75% to 6.75%.

“Interest rates on loans depend on supply and demand. If we see that some bank product has a huge demand due to other reasons, particularly, government policy in the mortgage market, it does not allow us to adjust the rates in terms of reduction,” Galstyan said.

According to him, the internal structure of the banks’ loan portfolio also affects the interest rates on loans – the share of consumer loans, the interest on which is higher, is growing. Since these loans are granted in Armenian drams, the weighted average interest rate is rising.

“If the demand for loans drops, we may see a decrease in interest rates on loans,” Galstyan said.

The loan portfolio of Armenia-based banks increased by AMD 1.2 billion or 24% to AMD 6.4 billion in 2024, including 1.4 trillion of consumer loans (33% growth for the year).

Mortgage credits account for almost the same amount, 32.9% growth over the year. The construction sector accounted for 10.4% (660.5 billion drams, 32.7% growth).

During 2024, interest rates on both AMD and foreign currency loans decreased. Rates on AMD loans from 1 to 5 years decreased by 0.7 p.p., the average interest rate at the end of the year amounted to 16.7%. Rates on loans in foreign currency decreased by 1.5 p.p., to 9.8%. -0-

spot_img

POPULAR

Ranking of the most profitable banks in Armenia based on results of second quarter of 2025

ARKA news agency publishes the ranking of the most profitable commercial banks in Armenia based on the results of the second quarter of 2025.

Net loan portfolio of Armenian banks in Q2 2025 increased by 6.11% to AMD 6.8 trillion

The combined loan portfolio of 17 Armenia-based commercial banks upped  by 6.11% in Q2 2025 compared to Q1 2025, amounting to AMD 6.82 trillion, according to a ranking compiled by  the ARKA news agency.

Insurance market of Armenia is in embryonic state

Insurance market of Armenia is in embryonic state

Ranking of most profitable banks in Armenia based on results of first quarter of 2025

ARKA news agency publishes the ranking of the most profitable commercial banks in Armenia based on the results of the first quarter of 2025.

LATEST NEWS

spot_imgspot_imgspot_img