ArmInfo. In the next 6 months, no significant change in interest rates in the banking system of Armenia is foreseen. This forecast was voiced by Arman Barseghyan, Director of Retail Banking of Ameriabank during an online press conference held on the eve. The expert found it difficult to give a forecast for the long term.
Barseghyan determined his forecast by the presence of both lowering and increasing factors of influence. In particular, in this regard, he referred to a similar press conference held a year earlier, where the banker outlined four main factors affecting the interest rate. "By the end of last year, we predicted that interest rates in Armenia would not change, while not excluding certain factors that could push rates upwards," he recalled. In the context of the first influencing factor, he called economic activity, which in January-August 2018 increased by 7.7% compared to the same period last year, which is quite a high figure. "And in this regard, the growth of the economy will form the demand for financial resources, which may provoke an increase in the level of bank interest rates," Barseghyan said.
The second factor, he considers international interest rates. "In all major markets over the past 12 months, there was a trend of rising interest rates, in particular, the US FRS base rate, Libor rates, and Eurobond issued in Armenia, which increased by 0.5-0.75%.
The third factor, according to him, is the monetary policy of the Central Bank of Armenia, which can be both deterrent and stimulating. "Recently, the main factor - the refinancing rate has remained unchanged - 6%. But here, looking a little ahead, certain changes are not excluded that will affect the market level of interest rates," he said.
And the expert called the last factor the competition between banks. "At the end of last year, we talked about possible consolidations in the banking market. After the regulator's statement at the end of 2014 about raising the minimum threshold for 2017 for the total capital of banks from the previous 5 billion to 30 billion drams, in 2015 the consolidation process began, resulting in By 2017, four banks left the market and the number of operating banks was 17. At the moment, this process has stopped and, from the point of view of competition, we have the same structure on the market. However, the main change after tightening this regulation is The issue of excess capital and liquidity among banks, which was previously present in the majority of players. Thus, the surplus is neutralized and bank-lending buffers are not so significant in this regard, which will also affect the level of interest rates, "he concluded.
To note, according to the latest data of the Central Bank of Armenia, the average interest rate on dollar and dram loans decreased in January-September 2018 to 10.63% from last year's 11.98% (for 2017). At the same time, the average interest rate on dram and dollar deposits decreased to 5.45% from last year's 5.93% (for 2017). Moreover, the rate on dram loans decreased from last year's 14.52% to the current 12.6% on average, and on dollar loans from 9.45% to 8.67%, while on dram deposits the rate decreased from last year's 8.17% to the current 8.07% on average, and in dollar terms - from 3.69% to 2.83%.