Tuesday, July 12 2011 21:04
Active placement of excessive liquidity of Armenian banking system to start in autumn 2011
ArmInfo. By autumn 2011 the demand for credit products in Armenia will considerably grow; therefore the banks will have to take prompt credit decisions, Acting Chairman of Board of Ardshininvestbank Karapet Gevorgyan told ArmInfo. He added that this is conditioned by a number of factors, including the striving to enliven the market with due regard for excessive liquidity.
"High liquidity is a result of careful credit policy of the banks during the financial crisis; this policy is connected with the crediting risk from the viewpoint of the risks/loan redemption ratio", said Gevorgyan. He thinks that the comparative stabilization of economy and the accumulated excess liquidity in the banks have activated the crediting and competition for "good" borrowers in both corporate and retail segments. "The banks should maximize incomes, for which it is necessary to increase the share of performing assets and form their optimal structure.
In this context, the excess liquidity is not an indicator of optimal structure of the balance, as it results in short-received income", he stressed. Gevorgyan thinks that the cardinal settlement of the problem is based on restoration of crediting volumes and settlement of the problem of "bad" debts. "The situation of excessive liquidity may remain quite long without considerable improvement of the financial state of the corporate sector and households", he said.
According to the Ranking of Commercial Banks of Armenia by ArmInfo, as of 1 April 2011, the summary credit portfolio of the commercial banks was over 1 trillion drams (almost $3 bln), having annually increased by 27%. In its structure the share of overdue loans made up 4.5% or 48.5 bln AMD (almost 10% annual decline), of them over 73% being loans classified into the "controlled" and "unreliable" risk groups.
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