Tuesday, December 9 2014 21:11
Central Bank: Armenia's banking system is resistant to shocks
ArmInfo. The banking system of Armenia is quite capitalized and liquid to resist the serious market shocks, Chairman of the Central Bank of Armenia (CBA) Arthur Javadyan said at today's press conference.
He said that the capital adequacy of Armenian banks is 16.4%, which is almost 1.5 times as much as the minimum index fixed by the CBA and twice as much as the minimum index of the Basel Committee on Banking Supervision (8%). "This shows that the Armenian banks' own funds ensure the coverage of over 16% of losses from the risk assets", said Javadyan.
He added that the share of non-performing loans in the banks' loan book is 6.7%. For 40% of them the banks have already formed loss reserves. In this light, the sudden write-off of the toxic loans by no means threatens the stability of the Armenian banking system.
Javadyan thinks that the banking system has a quite high degree of liquidity. Over 25% of the Armenian banks' assets are highly liquid assets: disposable funds, correspondent accounts (nostro) at CB and other banks, investments in government bonds, which will allow promptly settling the obligations to the depositors if needed.
The highly-liquid assets-call deposit ratio is 135%. Today the ratios of highly-liquid assets to total assets and call deposits are almost twice as high as the required levels (15% and 60%, respectively), which means that Armenia's banking system is highly liquid.
Javadyan said that banks in Armenia assess and minimize their risks on their own. "Now that demand for foreign exchange is growing, they are becoming conservative with preference given to permanent customers, but this is a temporary policy," Javadyan said.
"Our banking system is stable and reliable. In order to see if it is stable, we hold regular macro- and micro-stress tests. And all of them have shown that our banks are able to confront high risks," Javadyan said.
According to ArmInfo's Financing Rating of Banks of Armenia, as of Oct 1 2014 the capital of the Armenian banks equaled $1.2bln, assets $7.3, loans $4.9bln, obligations $6bln, call deposits $1.2bln, time deposits $2.7bln AMD. 63% of loans were loans given to economy, 33% loans given to individuals. In Jan-Sept 2014 the net profit of the Armenian banks made up $69.1mln. As of Oct 1 2014, ROE was 7.74%, ROA 1.24%.
Armenia has 21 banks with 506 branches all over Armenia and in Nagorno-Karabakh.
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