YEREVAN, May 26. /ARKA/. The Central Bank of Armenia considers it important for commercial banks to exercise caution when providing new loans amid the outpacing growth of lending compared to revenues, stated Central Bank Chairman Martin Galstyan.
“We expect commercial banks to be very cautious and careful when analyzing this information and providing new loans,” he said, presenting Armenia’s Financial Stability Report for 2025.
Galstyan emphasized the importance of properly assessing borrowers’ debt burdens and their ability to service debt. He stated that such an assessment should take into account the risks not only of the current macroeconomic environment but also of a possible worst-case scenario.
Loan Portfolio Growth
According to Galstyan, in 2025, the banking system’s loan portfolio extended to the economy grew by approximately 23%, while the deposit portfolio increased by 13%.
“Over the past three years, loan growth has almost doubled the annual growth of deposits. This means that the economy’s high credit demand was also financed by the banking system’s capital,” he said.
The head of the Central Bank noted that high growth rates were recorded for both household and business loans.
“The high growth in lending was primarily driven by high rates of income growth in the economy. This is also evidenced by the fact that loan growth was inclusive, meaning it covered almost all major lending areas,” Galstyan explained.
According to the Central Bank, in 2025, the highest growth was recorded for loans to the construction sector—30.2%—and for consumer lending—27.5%. Lending to industry increased by 17.6%, to the agricultural sector by 17%, to trade by 15.8%, and mortgage lending increased by 13.1%.
Growth in Household Lending and Financial Intermediation
According to Galstyan, the strong growth in household lending was primarily driven by an increase in consumer loans. This, he estimates, is due both to rising household incomes and the need to finance the purchase of durable goods for new apartments amid the active real estate market in recent years.
The head of the Central Bank noted that the growth in lending activity was accompanied by an increase in the level of financial intermediation.
“During the year, as a result of the strong growth in loans provided to households, their debt burden also increased,” he said.
Galstyan also noted that loan maturities have been increasing in recent years. He believes this mitigates the growing debt servicing burden, but also increases uncertainty regarding its uninterrupted servicing.
“In this context, also taking into account the risks arising from high global uncertainty, the Central Bank considers it important for commercial banks to apply prudent approaches to credit risk management,” he said.
