Tuesday, February 25 2014 14:49
Investments in government bonds in Armenia up 23.3% in 2013
ArmInfo. Investments of Armenian banks in the government bonds were up 23.3% as of Jan 1 2014 versus the same period of 2013 (a 27% year-over-year growth for Q4 2012) and 12.9% for Q4 2013 (versus 2% decline for Q3 2013 and 9.6% growth for Q4 2012) totaling 209.2 bln drams ($515.7 mln). According to the Analysis and Financial Rating of Armenian Bank's prepared by ArmInfo News Agency, the share of investments in government bonds in total assets of the banks grew from 6.2% to 7.1% for Q4 2013 versus 7.1% for Q4 2012, 6.5% for Q4 2011, 7.8% for Q4 2010 and 6.4% for Q4 2009.
HSBC Bank Armenia retained its leadership position by investments in government bonds - 31.5 bln drams ($77.6 mln). ArmSwissbank goes the second - 29.9 bln drams ($73.8 mln). The third position belongs to Armbusinessbank - 24.6 bln drams ($60.7 mln), the fourth position belongs to Ardshininvestbank - 22 bln drams ($54.3 mln) and VTB Bank (Armenia) ranks the 5th - 15.5 bln drams ($38.1 mln). The share of the top five banks in total investments in government bonds for5 Q4 2013 fell from 60% to 59%, versus 56.7% in Q4 2012, 58.5% for Q4 2011, 56% for Q4 2010, and 53.8% for Q4 2009. ArmSwissbank's annual and quarterly indicator was the highest.
Thirteen banks increased investments in government bonds as compared to Jan 2013 (exclusive of ProCredit Bank). Armenian Development Bank increased investments in government bonds over 3-fold (up 18th to 12th position in absolute terms). This indicator of 14 banks grew for Q4 2013, with ArmSiwssbank being the leader - 56% (up from the 4th to the 2nd position). This indicator of 7 banks fell over the year, while that of 6 banks fell for Q4 2013.
ProCredit Bank, the only bank to make no investments in government bonds before, created a portfolio og 1.2 bln drams ($3.3 mln) in Q4 2010, as it needed to invest temporary free funds in liquidity assets for further lending to SME segment, which the bank is specializing in. This balance item of ProCredit Bank fell almost 16% for Q1 2011 to 1 bln drams or $2.7 mln with zeroing in Q2 2011. This shows that the bank had gradually fulfilled its plan to lend to SME at the expense of the portfolio of government bonds.
To recall, against background of the national dram devaluation in March and deepening crisis phenomena summary investments in government bonds fell 21% in the first half of 2009, including 6.1% for Q2. Afterwards, this indicator grew 51.5% for Q3 2009. This balance figure fell because of reduction of the trade portfolios of government bonds. At that moment the proceeds from the trade portfolios made it possible for banks to retain lending rates. As soon as Armenia received credit funds from the WB and the Russian stabilization loan, specifically in late June 2009, they began restoring their portfolios of government bonds and on-lending the funds received. In addition, they involved in new credit programs. In 2010 the annual and quarterly dynamics of changes in the portfolio of government bonds grew higher than in 2009 - 45.4% and 18.3% respectively (annual 17.6% and quarterly 10.7% growth in 2009), which means that banks have restored their trade portfolios.
However, reduction of the given balance sheet item of most banks for 9 months of 2011and tangible slackening of the growth rates for 2011 and Q1 2012 (because of tangible decline at 6-9 banks), in Q2 2012 and Q1 2013 show that banks are short of resources for lending. Banks keep lending at the expense of their trade portfolios of government bonds.
Starting Q2 2013 trade portfolios began growing and exceeding the growth rates of lending due to shrinkage of the lending market. Therefore, banks prefer placing free resources in highly secured instruments. However, since Q3 2013 both the portfolios stopped growing and lending scales began slackening (0.6% growth versus 3.3%). Investments in government bonds fell 2% versus previous 8,1% growth. In Q4 2013 banks began actively replenishing their trade portfolios of government bonds ensuring a 12.9% growth amid 3.8% growth of the loan portfolios.
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