Thursday, April 28 2016 19:08

ArmInfo. In Q1 2016 net profit of Armenia's banking system grew by 33% y-o-y to 3.1 bln AMD ($ 6.4 mln), but the role of profits from credits was not significant in ensuring it.  According to the Express Ranking of Armenian Banks prepared by the Agency of Rating Marketing Information (ArmInfo) this indicator grew due to mainly four banks, which demonstrated profits after registering tangible losses and ensured 2-4-fold y-o-y growth. 16 banks in total operated with profit in Q1 2016, 7 of which have worsened their financial result by 18-71%.

Positive accumulated profit of 16 commercial banks totaled 7.8 bln drams, while accumulated profit of another 5 banks was negative.  These banks suffered a total of 4.7bln drams loss, 64% share of which is held by one bank that shrank from profit to tangible loss.

The banks increased credit exposures and other lending by 6.3% in Q1 2016 versus Q1 2015, investments in securities grew by 8.3% and funds on nostro-accounts and interbank credits and deposits by 10.1%. This allowed increasing total assets by 8.7% y-o-y versus 11.6% growth a year before.

In Q1 2016 the growth of the total liabilities of Armenia's banking system slackened from 13.7% to 7.1% y-o- y.  Sharp change of dynamics of attracted interbank loans was registered-a y-o-y drop by 9.1% from 44.2% growth in previous year. At the same time the amount of liabilities to clients improved dynamics to 20.5% y- o-y growth versus 2.5% drop a year before.

As a result interest incomes of the banks grew by 4.6% y-o-y, amid 1.5% growth of interest expenses, while non-interest incomes dropped by 11.3% amid decline of non-interest expenses by 6.1%.  As a result total incomes dropped by 11.6% amid drop of total expenses by 12.2% with accompanying decline of balance profit by 0.4%.

In Q1 alone the total incomes of the banking system declined by 15.2% and expenses by 14.3% with accompanying decline of balance profit by 29.3%, as a result of which the net profit suffered 13.8% quarterly drop.

The total capital of Armenia's banking system grew by 17.5% over year and by 3% in Q1 2016 to 571.8 bln AMD. Accumulated profit grew by 8.1% y-o-y, and authorized capital by 21.1% to 359.2 bln AMD. In y-o-y terms 8 banks have increased their authorized capitals-Ameriabank, VTB Armenia Bank, Areximbank, INECOBANK, Mellat, Anelik, Unibank and Armeconombank, the latter increased its authorized capital in Q1 this year.  It is noteworthy that in Q 4 2015 ProCredit Bank and BTA Bank announced about leaving the market by merging with INECOBANK and Armeconombank respectively.  Consolidation of the banks is determined by the fact that the banks have to meet the regulator's new minimum total capital requirement (30 bln drams starting from 1 Jan 2017). As of April 1 2016, only 6 banks have ensured this requirement- Ameriabank, ACBA-Credit Agricole Bank, HSBC Bank Armenia, Ardshinbank, INECOBANK and VTB Bank (Armenia). Armbusinessbank ranks next, the total capital of which is slightly less than the required 30 bln. 5 banks need to increase their capitals by 5-7 bln, three banks-by 9-11 bln, one bank by 15 bln and two banks by 18-19 bln (Artsakhbank and Armenian Development Bank). Byblos Bank Armenia is in unfortunate condition as it needs to increase its capital by 25 bln to meet the 30bln requirement, meanwhile the bank's accumulated loss is growing and has exceeded 3 bln AMD.