YEREVAN, October 27. /ARКА/. The Board of the Central Bank of Armenia has decided to increase the countercyclical capital buffer for banks by 0.25 percentage points, setting it at 2.25% of risk-weighted assets.
The decision was made on October 20, 2026, and the new standard will apply from May 1, 2027, according to the regulator’s website.
As noted in the regulator’s justification, the decision was made taking into account macrofinancial trends and credit market developments. Specifically, in the third quarter of 2026, the loan-to-GDP ratio in Armenia continued to increase, reaching approximately 87%. The loan-to-GDP gap was 6.6 percentage points.
The Central Bank notes that the financial cycle index has also increased, indicating the accumulation of cyclical risks in the financial system.
According to the regulator’s assessment, high activity in the real estate market overall remains. At the same time, price dynamics in the primary and secondary markets differ: the primary market continues to experience high annual price growth, while the secondary market is showing signs of stabilization.
The Central Bank also points to trends toward increased activity in the real estate market and a significant increase in average real estate prices compared to the beginning of the year. Among the factors requiring attention, the regulator cites growing interest in real estate as an investment asset.
Furthermore, the rationale for the decision notes the acceleration of mortgage lending since the beginning of the year and continued high lending activity in the construction sector. According to the Central Bank, these trends could contribute to the accumulation of additional risks in the real estate segment.
Given these circumstances, the Central Bank Council deemed it appropriate to increase the countercyclical capital buffer by 0.25 percentage points to 2.25%.
The previous decision of the Central Bank Council, dated July 28, 2026, set the countercyclical capital buffer requirement at 2%, effective February 1, 2027.
The countercyclical capital buffer is one of the macroprudential policy instruments aimed at increasing the resilience of the banking system to risks associated with the credit cycle.
