ArmInfo. The replenishment of Armenian banks' capital base by 15% per annum on July 1, 2017, or by 85.1 billion drams ($ 177.1 million) made it possible to accelerate the credit growth rate to 16.6% from last year's 9.5%. Activation of banks in the credit market, in turn, increased net profit in the first half of 2017 by 49.5% per annum - up to 19.2 billion drams ($ 39.9 million).
According to the Financial Rating of the Armenian Banks, prepared by ArmInfo News Agency , the volume of credit investments by July 1, 2017 reached 2.8 trillion AMD ($ 5.7 billion), total capital - 669.6 billion AMD ($ 1.4 billion), and the regulatory total capital - 633.3 billion AMD ($ 1.3 billion) with an annual growth of 21.1%.
10 banks completed their authorized capital on an annual basis, thereby ensuring acceleration of overall market growth from 21% to 23.1%, reaching a level of 453.7 billion AMD or $ 944.3 million. These are Ardshinbank and Araratbank (taking into account the merger of Areximbank and Armenian Development Bank ), Armbusinessbank, Converse Bank, Armeconombank, Unibank, Anelik Bank, Prometey Bank, Artsakhbank and Mellat Bank.
The average capital adequacy ratio reached 35.46% by July 1, 2017, versus 27.35% a year ago (with the minimum required 12%). The overall liquidity on the average in the market grew from 30.33% to 36.48% (with the minimum required 15%), and the current liquidity from 200.63% to 216.57% (with the minimum required 60%). In the quarterly section (for the II quarter), against the backdrop of a 20% decline in profits due to write-offs for off-balance of toxic loans, there was a decrease in the capital adequacy, total and current liquidity, which on average as of April 1, 2017 were 37.68% 37.01% and 244.89%. The return on capital and the profitability of assets in the banking market have changed year-on-year in the direction of growth: ROE - from 4.9% to 5.6%, and ROA - from 0.8% to 0.9%. I half-year of 2017 with loss has completed only one bank, while a year earlier there were four such.
The replenishment of capital by banks was dictated by the need to implement by January 1, 2017 a new regulatory requirement for a minimum amount of total capital of 30 billion AMD, which was taken by the Central Bank in December 2014 versus the current minimum 5 billion AMD. Thus, 21 banks operating in the Armenian market at that time were given a two-year term for which they had to raise their capital to the required standard, and this task faced medium and small banks, since large players already had an outstripping capital base. This task turned out to be beyond the power of four banks - ProCredit, BTA, Areximbank-Gazprombank Group and Armenian Development Bank, which withdrew from the market by merging with INECOBANK, Armeconombank, Ardshinbank and ARARATBANK, respectively.
Experts and market participants agree that for the country like Armenia, 10-12 banks are sufficient to maintain the competitiveness of the sphere, of which 5-6 are large players-backbone banks, and the rest are niche ones. In this regard, they believe that the consolidation of the banking sector will continue in 2017.