Thursday, August 15 2013 17:32

Growth of assets in banking system of Armenia slackens in Q2 2013


ArmInfo. Growth of assets in the banking system of Armenia slackened in Q2 2013 from 6.4% to 3.1% (versus 7.5% growth for Q2 2012). Assets grew 19.6% versus the 1st half of 2012 (versus 25.3% year over year growth in Q2 2012). This indicator grew 10.3% for the first half (versus 7.4% growth for 1st half of 2012) to 2.6 trillion drams ($6.4 bln) as of June 30.

According to the Financial Rating of Armenian Banks prepared by ArmInfo, assets grew versus Q2 2012 as credit exposures increased 14.5%, investment in government bonds increased 22.5%, funds on nostro- accounts doubled, and disposable funds grew 9.7%. Growth of assets for Q2 2013 slackened in the wake of 3.3% growth of the loan portfolio - from 6.1% - (versus 9.5% for Q2 2012), and 20.6% growth of funds on nostro-accounts - from 47.7% - (versus 27.8% growth for Q2). As a result, investments in government bonds grew 8.1% versus 2.3% decline (2.4% decline for Q2 2012) amid 0.2% growth of disposable funds (versus 2.9% decline in Q1 2013 and 6.5% growth in Q2 2012). Funds on nostro accounts grew as Ameriabank's funds grew extremely. Exclusive of those funds, nostro-account in the market would slump.

In the structure of assets, the share of credit exposures changed insignificantly - 67.2% (versus 67.1 in Q1 2013, 70.2% for Q2 2012). The share of investment in government bonds grew from 6.2% to 6.5% (versus 6.4% for Q2 2012), the share of disposable funds fell from 3.6% to 3.5% (versus 3.7% for Q2 2012), and the share of nostro-accounts grew from 5% to 5.8% (versus 3.5% in Q2 2012).

ArmInfo's experts say dynamics of these indicators show that lending is maintained mostly at the expense of the funds provided as part of international credit programs. Alongside with that banks sell their trading books of government bonds and used disposable funds. The significant growth on funds on nostro-accounts followed placement of free funds to be used for on-lending. Few banks still prefer lending to economy sectors rather than to individuals, while most banks have been focusing on personal loans since 2012. So, there are upward trends of retail lending (overdrafts, credit cards, loans for purchases by installments, mortgage).

Top five banks in terms of assets as of June 30 2013 were Ameriabank, ACBA-Credit Agricole Bank, VTB Bank (Armenia), Ardshininvestbank and HSBC Bank Armenia and. The share of these banks in total assets of the banking system was nearly 51% for their share in the total loan portfolio is nearly 49%.

Real credit exposures totaled 1.8 trillion drams ($4.3 bln) or 67.2% of assets as of June 30 2013. Inclusive of the possible loss reserve, this indicator totaled 1.7 trillion drams, with reserves growing 15% versus the same period of 2012, and doubled versus the same period of 2011. The share of overdue loans in the total loan portfolio of commercial banks (exclusive of inter-bank loans and deposits) reaches 6.6% (versus 6.3% in Q1 and 5% in Q2 2012). The share of possible loss reserve was left unchanged -2.1% over the year (this indicator of one bank exceeded 5%).

The share of lending to economy sectors fell from 65% to 63% for Q2 2013 (versus 65.5% for Q2 2012) or 1.127 trillion drams ($2.7 bln). This indicator grew 10.9% as compared to Q2 2012 ( versus 34.9% annual growth in Q2 2012. In Q2 2013 the growth slackened from 6.8% to 0.8% (versus 8% growth for Q2 2012 and 9.5% growth for Q2 2011). At the same time, summary personal loans provided by commercial banks grew 20.7% (versus 33.2% annual growth for Q2 2012), and from 7% to 4.8% for Q2 2013 (versus 9.1% for Q2 2012 and 7.5% growth for Q2 2011) to 550.1 bln drams or $1.3 bln (up from 29.4% to 31% versus Q2 2012).
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