ArmInfo. The International Finance Corporation (IFC) supports consolidation of Armenian banks to boost SME lending. The Corporation's press office has told ArmInfo that IFC, a member of the World Bank Group, is providing a $20 million loan to Armenian Inecobank to support its acquisition of ProCredit Bank Armenia, promoting the first market-driven consolidation in Armenia's banking sector and boosting access to finance for small and medium enterprises. Further information will be presented at the Dec 10 event.
The analysts of the Financial Information Service of the Agency of Rating Marketing Information (ArmInfo) say that the merger of INECOBANK and ProCredit Bank (Armenia) increases the INECOBANK's total capital by 9.2 bln AMD to 38.3 bln AMD, which exceeds the CBA's new standard (30 bln AMD) that will come into effect on 1 Jan 2017. With such a big total capital, INECOBANK can join the Top-5 leaders
of the Armenian banking system.
As of 1 October 2015, the share of accumulated profit in the total capital of INECOBANK was 47% (4th position in absolute terms, 52.3% year-over-year growth), and the share of the authorized capital was
42%. As of 1 Oct 2015, the majority shareholders of INECOBANK were Avetis Baloyan - 35.23%, Karen Safaryan - 30.34%, KfW Group member Deutsche Investitions-und Entwicklunsgesellschaft mbH (DEG) - 12.58% and the IFC - 9.32%. The sole owner of ProCredit Bank is ProCredit Holding AG & Co. In ProCredit Bank's total capital, the share of accumulated loss was 8% (16th position in absolute terms, 26.2% year-over-year decline). As a result, the authorized capital is bigger than the total capital.
By ArmInfo's Financial Rating of Armenian Banks, INECOBANK is quite active in both corporate and retail lending. In terms of SME lending, the bank is among the Top-10 - 36 bln AMD (almost 35% of the total loan book of the bank) as of 1 Oct 2015. The bank successfully cooperates with international structures in various programs, including projects on SME lending. As of 1 Oct 2015, the loan book of
INECOBANK exceeded 104 bln AMD or 66% of assets. The loan book of the bank was mostly focused on trade and industry and partially on public catering, services, construction, transport, communication and agriculture. In Jan-Sept 2015, INECOBANK held the 3rd position in terms of net profit - 3.3 bln AMD.
Committed to the mission of its banking group, ProCredit Bank (Armenia) has always been in the lead in terms of SME lending in the total loan book - about 83%, but in absolute terms (over 39 bln AMD)
it is among the Top-10, outstripping INECOBANK by 2 positions. The loan book of ProCredit Bank is focused mostly on trade, industry and agriculture. In Jan-Sept 2015, the net profit of ProCredit Bank was
88.2 mln AMD (down 73.3% versus Jan-Sept 2014, down from the 13th to the 14th position).
Established in 1996, INECOBANK is one of the most dynamically developing banks on the financial market of Armenia. ProCredit Bank has been operating on the Armenian banking market since 5 Feb 2008. Committed to the credit policy of ProCredit Holding AG, the bank specializes in SME lending.
To recall, Armenia became a member of IFC in 1995. The Corporation has invested $233 mln in 52 projects in a number of areas, including the financial market, production, agriculture, services, mining
industry. IFC's trade finance portfolio in Armenia totals over $122 mln.