YEREVAN, May 25. /ARKA/. Last week, the Armenian financial market focused on bank restructuring mechanisms, the tax model for bank dividends, the regulatory agenda, comments from international financial institutions, and the development of financial literacy.
1. Macroeconomic Environment: World Bank Links Rising Inflation to External Factors
In its Armenia Monthly Economic Update – May 2026, released last week, the World Bank noted that inflation in Armenia continued to rise in April amid tensions related to the conflict in the Middle East and the situation in supply chains. According to the World Bank, inflation rose to 5.3% year-on-year and 1.3% month-on-month, primarily due to a 9.5% year-on-year increase in food and soft beverage prices.
For banks and the financial market, this commentary is important as an indication of the nature of price pressure: it is linked not only to domestic demand but also to external factors, which in practice could strengthen the role of monitoring external shocks in bank risk management and interest rate policy.
2. Banking Regulation: Bank Restructuring Mechanism Under Discussion
On May 18, the Parliamentary Committee on Financial, Credit, and Budgetary Affairs of Armenia approved a draft law introducing a bank restructuring mechanism to replace the existing liquidation procedure. According to the proposal, exclusive authority to implement restructuring mechanisms will be vested in the Central Bank of Armenia.
For the market, this could mean expanded regulatory tools for resolving problem banks, while for clients and counterparties of banks, the existence of such a framework could improve the predictability of procedures in the event of a deterioration in the financial condition of an individual institution.
3. Bank Taxation: The relevant committee approved an increase in the dividend tax rate to 15%
On May 20, the Committee on Economic Affairs of the National Assembly of Armenia approved draft amendments providing for an increase in the dividend tax rate for bank shareholders from 5% to 15%.
The context of the decision is related to the specific taxation of the banking sector, where a significant portion of financial transactions are exempt from VAT. At the same time, the proposed model maintains the current regime for profits remaining in the banking system and allocated to capital, loans, and other banking products.
For banks, this could change the parameters for profit distribution between capitalization and shareholder distributions.
4. Foreign Exchange Market: The dram maintained a narrow range against the dollar, while the ruble strengthened.
According to the Central Bank, on May 18, the average market exchange rate for the dollar was 368.04 drams, for the euro – 427.96 drams, and for the ruble – 5.0736 drams. By May 22, the dollar had fallen to 367.97 drams, the euro – to 426.7 drams, and the ruble had risen to 5.1616 drams.
A stable range for the dollar against the dram can support settlement predictability for importers, borrowers, and market participants with foreign currency liabilities. At the same time, the strengthening of the ruble may impact the dram equivalent of inflows from Russia and transactions related to ruble flows.
5. Capital Market: Unibank plans to raise 3.9 billion drams through a new share issue.
On May 20, Unibank announced its intention to raise 3.9 billion drams through a new share issue. The bank plans to place 10 million shares by September 9, 2026. Both individuals and legal entities can purchase shares at any bank branch. The minimum investment is 1,014,000 drams.
For the banking sector, this may indicate a continued link between bank capitalization, dividend policy, and the development of corporate instruments. For investors, such issues may provide additional guidance on the structure of bank capital and available instruments for participation in the financial sector.
6. Financial Literacy: Idram, IDBank, and Novosti-Armenia Launch a Series of Games for Children
Idram, IDBank, and Novosti-Armenia launched a series of financial literacy games for children on May 22. A special quiz will be published monthly as part of the new “Games” section on the Newsarmenia.am website. Over the course of eight months, participants will have access to eight quizzes covering topics such as pocket money management, savings, banking products, and responsible financial management.
The participation of the payment company, bank, and media allows for a unified educational content, digital format, and access to a wide audience. Such initiatives could be significant for the market in the context of the growth of cashless payments, digital banking products, and the need for responsible customer behavior when interacting with the financial system.
7. Banking Sector: Deposits Grew by 2.2% in March, Lending by 1.6%
Deposits at commercial banks in Armenia increased by 2.2% in March compared to February, while lending grew by 1.6%, according to the World Bank’s Armenia Monthly Economic Update – May 2026. According to the WB, annual growth adjusted for exchange rates amounted to 17.8% for total deposits, while lending grew by 23.4%.
The growth in deposits could support banks’ funding base, while the expansion of lending reflects the banking sector’s continued role in financing the economy. For the market, these indicators are important as indicators of liquidity, asset quality, and banks’ ability to maintain lending activity while maintaining regulatory buffers.
Weekly Summary
Overall, the week saw a combination of a stable currency environment, an active regulatory agenda, and rising bank balance sheets. The main areas of focus remain banking stability, parameters of the monetary environment, capital market development and expansion of financial infrastructure.
