Thursday, November 15 2018 14:44

ArmInfo.The net profit of Armenian banks grew over 9 months of 2018 by 81.3% y -o- y to 51.7 billion drams or $ 107.1 million. This, against the background of a  meager acceleration of asset growth from 14% to 15% and a slowdown in  the growth of total capital from 11.5% to 10%, increased the level of  efficiency ratios.

According to the Financial Rating of Banks of  Armenia prepared by ArmInfo the level of asset profitability (ROA)  increased y-o-y from 0.91% to 1.53%, and return on capital (ROE) from  5.46% to 9.42%.

However, capital adequacy declines The slowdown in capital growth  amid continued growth in risk-weighted assets is the reason for the  decline in capital adequacy (N1 = min 12%) - from 34.74% on October  1, 2017 to 29.08% on October 1, 2018.  The same trend is observed in  liquidity

The deterioration in the dynamics of a part of highly liquid assets,  amid a moderate rise in total assets and a slowdown in demand  liabilities, led total and current liquidity to a moderate decrease.  Thus, in y-o-y terms, the level of total liquidity (N2 / 1 = min 15%)  decreased from 36.1% to 32.1%, and the current (N2 / 2 = min 60%) -  from 219.2% to 190.42 %

Assets are in stagnatation

Among assets, which exceeded 4.7 trillion drams ($ 9.8 billion) by  October 1, 2018, the share of the loan portfolio is 65.3%, the volume  of which is growing slowly. In y-o-y terms, the loan portfolio grew  by 17%, against last year's 13.5%. Investments in securities holding  the second position in terms of share in assets (12.3%, including 11%  are government bonds), sharply slowed the ascent from 36% to 14%,  which was caused mainly by government bonds - from 26 , 5% to 14%. At  the same time, balances on correspondent accounts with the Central  Bank, which account for 11.7% in assets, accelerated growth from 7.6%  to 13.1%. However, the key highly liquid assets occupy an  insignificant share: funds on correspondent accounts with banks -  3.1%, cash - 2.6%, metal accounts - 0.02%, and only the first of them  showed a sharp acceleration of growth - from 12% to 57.2%, while the  other two worsened the trend down to stagnation. It was the  multidirectional dynamics of the components that did not allow the  assets to fix the rise.

Profit provokes capitalization 

In the structure of total capital, amounted to 748.7 billion drams ($  1.6 billion) as of  October 1, 2018 the cumulative profit is 23.2%,  with y-o-y dynamics registering  15% growth from the 2.2% decline .   However, the authorized capital, which holds the lion's share of  64.3%, was able to keep growing, despite the slowdown from 18.3% to  6%, only due to the capitalization of three banks.

Growth of liabilities is slowing down

In the total liabilities, which amounted to 3.99 trillion drams ($  8.3 billion) as of October 1, 2018, the dominant components are  losing momentum of growth. Thus term deposits, which accounted for  44.5%, slowed down growth from 13.2% to 10%. Demand liabilities with  a share of 24.1%, slowed down the growth more sharply - from 44% to  16.7%. And the loans / deposits attracted from banks and other  financial organizations that occupy a modest share - 19.2%, on the  contrary, improved the trend with an exit from the 1.4% decline to  8.4% growth.

Major income items are too reserved

The income from dominant items grew insignificantly during the year:  from loans to customers - by 1.9% and securities - by 5.1%. But at  the same time, incomes on less volume items increased significantly:   interbank correspondent accounts and deposits / credits - by 26.7%,  money transfers - by 22.4%, and card transactions - by 33.4%. And  this is happening against the background of increasing economic  activity in the country, but mainly at the expense of the service  sector, while banks are mainly oriented towards the basic segments of  the real economy.