Wednesday, March 11 2020 17:55

ArmInfo. In the difficult  conditions of reduction of credit margin amid lack of client base,  the restoration by the local national system Armenian Card of its  market positions can be considered a significant event in the banking  market last year. This is stated in the regular 20th anniversary  analytical bulletin "Armenian Banks in the Card Business", prepared  by the Rating and Marketing Information Agency (ArmInfo IC). The  bulletin is published twice a year.

As noted in the study, the number of issued active local cards  increased by almost 14% over the past year, and their total number,  after a long period of stagnant growth, again approached a share of  40%, which is higher than the number of active cards of international  payment systems separately. The revival of ArCa national cards,  according to analysts, is the result of several key factors: low  emission costs, convenience as a tool for consumer lending, including  as gift cards, the introduction of certified chip technology by  Armenian Card, Single Card Payment System, and most importantly,  access to foreign markets due to intersystem interaction with the  Russian payment system MIR.  As noted in the bulletin, the low  interest rate policy has not yet been able to revive the corporate  lending market, but it has significantly increased the activity of  banks in the credit retail segment (up to 30%), which was reflected  in the further quantitative and qualitative growth of the plastic  card business. However, the limited number of new customers, both in  the corporate and retail segments, left the rate of quantitative  growth of active bank cards unchanged-by an average of 17% per annum.  Apparently, the country's banking system has already overcome the low  base effect, and the dynamics of further growth in the number of  cards will depend on economic activity, the state of aggregate demand  in the country and increasing household incomes. In today's  conditions of over-lending to the population, significant  quantitative shifts should not be expected.

Despite a slight decrease in activity in Internet commerce,compared  with the initial boom associated with the low base effect and the  significant introduction by banks of technological solutions and  their own innovations to activate it, it is likely that the growth  rate of this business will now be in the range of 20- 25%  year-on-year, taking into account the restrictions introduced as part  of regulatory customs measures by the EAEU. And, nevertheless, as for  today bank cards remain the dominant tool against the background of  poor integration of the country into international electronic payment  systems.

In 2020, in the conditions of cautious optimism with respect to the  general state of the economy (decrease in GDP growth rates forecasted  by international organizations) and the banking system, in  particular, due to the presence of risks of falling profitability,  one should not expect significant revitalization in the plastic  market. The market, most likely, will drift in the medium-term  sideways trend, the drivers of which will be the largest and most  innovative banks who have resources.  Note that, according to the  Central Bank of Armenia, the total number of plastic cards was 2.4  million. And the total volume of plastic transactions exceeded 2.3  trillion drams.