ArmInfo. The government's initiative to amnesty the fines / penalties of bad loans with concomitant refinancing, the implementation of which the banks have started without delay since July this year, did not lead to reduction in overdue loans.
Presumably, one of the main reasons for the upward dynamics of the NPL portfolio was the mining industry, the problems in which, due to the stringent environmental requirements, had negative impact on the quality of banks' loan portfolios, since relatively large loans were usually provided to this area. This opinion was expressed by Karina Melikyan, an analyst at AmRating national rating agency.
Thus according to the Financial Rating of Banks of Armenia, prepared by ArmInfo, by 1 October 2018 the volume of overdue loans in Armenia's banks increased by 31.4% per annum, while a year earlier in the same period a decrease of 5.2% was recorded. Due to the rising dynamics of overdue loans, the share of NPL in the loan portfolio increased by 1 October 2018 to 11.2% from last year's 10.2%. In the loan portfolio of 3.1 trillion drams ($ 6.4 billion, with a y-o-y growth of 17%), overdue loans accounted for 354.5 billion drams ($ 734.3 million), of which 39% are in the doubtful group, 35% are hopeless, and the proportion of controlled and non-standard groups is 13% each. A year earlier, in the structure of overdue loans, the lion's share fell on a hopeless group - 59.4%, and the proportion of the doubtful group was much more modest - 12.7%, while the other less risky loans were: controlled - 17.9% and non-standard - 10 %.
The y-o-y growth in overdue loans was caused by a sharp increase in a doubtful group of loans 4-fold and non-standard almost 2-fold, with a very modest decline in bad and controlled loans - by 24.2% and 3.2%, respectively. Against this background, standard loans grew in y-o-y terms 16.7%. To note for comparison, that a year earlier bad loans showed an increase of 15.7%, while the other less risky groups were in decline: doubtful - by 44.8%, non-standard - by 22.1%, controlled - by 5 , 3%, while standard loans showed an increase of 14.3%.
Consumer loans - 25.8% occupy the major share in bad loans, the retail sector - 16.4%, the agricultural sector - 12.7% and industry - 8.7%. In the total volume of overdue loans, these areas also dominate: consumer loans - 25%, trade - 14%, agricultural sector - 13.4% and industry - 12.2%.