Armenian banks NPLs grow under Central Banks control

The Central Bank of Armenia (CBA) is going to take relevant measures to curb the growth of the share of non-performing loans (NPLs) in the aggregate loan book, Andranik Grigoryan, Head of the Financial Stability and Development Department of the Central Bank of Armenia (CBA), said at a press conference on May 26.       

 

He said that NPLs were registered both in the total loan book of the banks and in particular sectors, except for transport and communication.  

 

"Nevertheless, the risks stemming from the loan book quality deterioration are controllable. The CBA os going to minimize the possible negative impact on the NPL growth on the stability of the banking system," said Grigoryan. He added that the share of such loans was 6.8% versus 4.5% a year before.   

 

According to the Financial Rating of Armenian Banks by the Agency of Rating Marketing Information (ArmInfo), as of 1 Jan 2015, the share of NPLs in the aggregate loan book of the commercial banks (interbank loans and deposits exclusive) was 8.1% (versus 5.2% in Q4 2013, 4.8% in Q4 2012). This index of three banks ranged within 18-32% (while the admissible international critical limit is 10-15%), and the share of the loss reserve kept growing - from 2.1% to 2.8% over year (3-6% in seven banks). By 1 Jan 2015, the real provision of crediting totaled 2.3 trillion AMD ($4.8 bln) or 66.6% of assets. The loss 

reserve inclusive, this index was 2.2 trillion AMD. The loss reserve experienced 63% year-over-year growth and more than a 2-fold growth within a 3-year dynamics.