IMF: Consolidation of Armenia`s banking system will make it more reliable and sustainable

Consolidation of Armenia's banking system will help making it more reliable and sustainable, Masood Ahmed, Director, IMF Middle East and Central Asia Department, said in a press conference on June 30 in response to ArmInfo's question concerning the situation in the banking system of Armenia. 

 

Masood Ahmed pointed at the following major problems of banks from the falling economic growth rate and economic activity: the growing share of NPLs at banks, high level of dollarization, high number of 

forex loans, which may affect the balance of banks in case of the exchange rate fluctuations.  Therefore, the IMF specialist said, the Armenian Central Bank's decision to gradually increase the minimum capital of banks to 30 billion drams until 2017 was a well-thought and wise decision.  

 

According to ArmInfo's data, the share of NPL in the loan book of the Armenian banks has grown from 1.1% to 8.1% in the period from 2008 up to 2014 - the international critical limit is 10%-15%. The foreign 

exchange loans accounted for 64% of the aggregate loan book of banks in 2014.