Wednesday, March 20 2013 18:35
Level of non-performing loans in small and medium entrepreneurship is no threat to Armenia's banking system
ArmInfo. The level of non-performing loans in small and medium entrepreneurship (SME) is no threat to Armenia's banking system, Valeriu Razlog, Head of the Yerevan Office of EBRD, said. He added that the level of non-performing loans at 4.5-5% is not a bad result.
When forecasting the state of the loan book of the Armenian banking system, Razlog said that he expects no serious deterioration concerning non-performing loans in 2013 and 2014. The EBRD follows the level of credit worthiness of small and medium businesses in Armenia. Like in many other countries, in Armenia lending to SMEs has grown during the crisis, and this was one of the key solutions of various countries' governments: this way they supported the lending. Razlog thinks that due to some conservatism of Armenian banks and the active work of the Central Bank of Armenia, as well as to donor inflows in the local currency, the level of non-performing loans has been retained at an acceptable level.
Razlog expressed hope that the future Government, like the current one, will actively work to improve the investment climate in the country and facilitate the access to long-term financing, both in local currency and foreign exchange. He thinks that the banking sector should switch from leveraged financing to project financing.
Artak Hanesyan, CEO of Ameriabank, also thinks that the current level of non-performing loans is acceptable for the banking system of the country. He explained that this index grew from 1% in 2008 to 5% in 2012 due to the crisis phenomena, which are not over yet. Nevertheless, Hanesyan stressed that in Ameriabank the share of non-performing loans in the total loan book of the Bank does not even reach 1% and according to the internal criteria of the bank, it mustn't exceed 3%.
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