In Armenian banks loan portfolio, annual decline in the NPL share from 13.2% up to 9.8% due to a significant slowdown in the growth of bad loans

ArmInfo. In the aggregate loan  portfolio of Armenian banks, the NPL share decreased by July 1, 2017  year on year from 13.2% to 9.8%, reaching 269 billion AMD in absolute  terms. However, five banks, nevertheless, overshoot this indicator  for the maximum limit of the critical limit - 22-33% against the  internationally acceptable 10-15%.

According to the Financial Rating of Armenian Banks, prepared by NA  ArmInfo, the absolute value of overdue loans decreased by 13.3% per  annum, against the growth of 33% a year earlier. Moreover, in  dynamics, along with the currently operating 17 banks, four outgoing  participants from the market are also taken into account, which for  the time being functioned. These are ProCredit Bank, BTA Bank,  Areximbank-GPB Group and Armenian Development Bank, which merged in  2015- 2016 respectively with INECOBANK, Armeconombank, Ardshinbank  and Araratbank. In particular, ProCredit Bank and BTA Bank left the  market at the end of 2015, and Areximbank and the Armenian  Development Bank - at the end of 2016.

In the structure of the NPL, the share of bad loans increased from  47.2% to 58.1% per annum, exceeding 156 billion drams by July 1,  2017. In comparison with the indicator of the year-old, the amount of  bad debt grew only by 6.7%, which is much more modest than the  dynamics of the same period in 2016, when this category of loans  doubled. Only in the first half of the year 2017, the amount of bad  debt increased by 14.3%, slightly losing to the upward trend of the  first half of 2016 - 18.9%.

The bulk of bad loans is concentrated in consumer loans - 19.2%,  trade - 17.6%, industry - 13.5%, agricultural sector - 12.9%, but in  absolute terms this category of loans in these areas decreased by  5-13% % (with a maximum in the industrial sector and a minimum on  consumer loans). A year earlier, the same spheres dominated the bad  loans, but with a higher share: consumer loans - 21.5%, trade -  20.8%, industry - 16.5%, agricultural sector - 15.6%.

The total volume of credit investments of Armenian banks accelerated  annual growth rates to 16.6% from 9.5% a year ago, to 2.8 trillion  AMD, which in turn prompted an upward trend in assets from 6.7% last  year to 19.3% slats in 4.2 trillion. This allowed the income from  lending to accelerate the rate of ascent - from last year's 4% to the  current 7.3%.

As a result, net profit in the banking system of Armenia increased by  49.5% per annum for the first half of the year to 19.2 billion drams,  but quarterly the significant growth of the first trimester was  replaced in the second by a 20% decline, which is most likely due to  write-off of toxic loans From balances and the continuing  accumulation of loans in a hopeless group. (The calculated exchange  rate of the dram as of June 30, 2012 was 480.47 AMD/USD1).