Central Bank: In 2016 we succeeded with securing price and financial sustainability

ArmInfo. In 2016, Armenian Central Bank, in virtue of its consequent works and trust obtained, has secured price and financial sustainability and essentially decreased inflation expectations, the Central Bank Chairman stated at New Year banquette party, summarizing 2016 results. 

According to him, softening the inflation expectations impacted the financial sector with the decrease of interests rates due to long term liabilities, creating a base to rehabilitate the domestic demand and economic growth in prospect. Under the conditions of  low inflationary pressure the Central Bank during one year has been decreasing the refunding ( interest)  rate step by step -3,5 % for 2016, - down to December 6,25% from that at 9,75% at the end of 2015.  

Banks could capitalize rapidly and implement the upcoming requirements in respect to the total capital.  That was aimed at the improvement of the financial sustainability of the banking system in long term prospect, and its role in the country's economy. In 2016 four Agreements on Banks consolidation were concluded. The integration of banks opened an option of funding large business-projects, secured the accessibility and acceptability  of financial services, increased the capacity to cancel financial risks at own costs, and the synergy effect compounded the competitive advantages and strong points with the further increase of efficiency.

In 2016 the banking system secured a 15% lending growth, 20% credit portfolio growth and capital growth for 25.The insurance segment was also pretty active during the year reported, increasing assets for 13% and the capital - for 20%. All other participants of Armenian financial market also secured financial indicators growth. As of today, the financial framework of the country possesses liquid assets more than enough to fund various prospective economic projects within of keeping own sustainability.

Within its policy, the Central Bank promotes the capsulation of long-term AMD based assets, consequently reflected in lending terms.  Besides, within the purpose of the long-term lending in respect to certain sectors of the economy under conditions more acceptable than those in the market, the Central Bank stays in touch and cooperation with the Government and international financial entities.   In 2016 Central Bank signed 3 Agreements with the European Bank on Investment and German Bank of KfW, two of which are aimed at MSE support and one - for realty funding. Only in 2016, at the Central Bank subsidiaries and affiliates costs about 2000 hypothec loans   have been refunded totaling AMD 20 mln, as well as 3500 study loans and 1200 consumer loans for military service men have been issued.  These projects are to be continued in 2017.

The regulatory modifications applied in 2016, became a basis for the further expansion of international cooperation in coming years at the capital markets and for the development of generation-based financial institutions.

To note, as of the year of 2017 the financial network of Armenia comprises 17 banks, 33 lender companies and 6 insurance entities. In 2016 the Procredit Bank (unified with INECOBANK), BTA Bank (unified with ArmEconomBank), Areximbank-Gazprombank Group (unified with Ardshibank), and Armenian Development Bank (unified with Ararat bank) dropped off the market due to dissolution and restructuring mentioned.