ArmInfo.Fitch Ratings has affirmed ACBA-Credit Agricole Bank CJSC's (ACBA) and Ardshinbank CJSC's (Ardshin) Long-Term Foreign- Currency Issuer Default Ratings (IDRs) at 'B+' with Stable Outlooks. The banks' IDRs and senior debt ratings are driven by their intrinsic strength, as captured by their 'b+' Viability Ratings (VRs).
The VRs are constrained by the risks of a potentially cyclical broader operating environment, and their exposure to a highly concentrated, heavily dollarised and developing economy. The VRs also capture the banks' currently stable financial profiles, supported by rapid economic growth in the past few years, and their reasonable market shares of 13% and 8% of total sector assets at Ardshin and ACBA, respectively, while the latter also has a strong 50% market share in agricultural lending.
The banks' Support Rating Floors of 'No Floor' and Support Ratings of '5' reflect Fitch's view that the Armenian authorities have limited financial flexibility to provide extraordinary support to banks, if necessary, given the banking sector's large foreign- currency liabilities relative to the country's international reserves.
Ardshinbank CJSC was founded in 2003. In December 2016, Areximbank-Gazprombank Group merged with Ardshinbank. According to the total number of branches (64) and the number of regional branches (43) Ardshinbank holds the 2nd position. The majority shareholders of Ardshinbank as of January 1, 2020 are Arins Group LLC (this is renamed Business Investment Center LLC) - 67.97% and REGION Industrial and Financial Corporation CJSC (RF) - 29.52%.
ACBA-Credit Agricole Bank CJSC has been operating in Armenia since 1995. The Bank's branch network has 59 branches, of which 18 are located in Yerevan, and 41 in the regions of Armenia. The majority shareholders of the bank as of January 1, 2020 are SJSC Sacam International (a member of the Credit Agricole S.A. group) - 5% and ACBA Federation CJSC - 95%.
According to the Financial Rating of the Banks of Armenia as of December 31, 2019 prepared by ArmInfo IC, Ardshinbank and ACBA-Credit Agricole Bank are in the TOP-5 in terms of credit investments. ACBA- Credit Agricole Bank is a traditional leader in agricultural loans - about 33% of the bank's loan portfolio, 32% is concentrated on consumer loans, almost 27% - on SME loans. ACBA-Credit Agricole Bank's dominant share in total agricultural loans in the banking market is about 53%. And in Ardshinbank's portfolio 23% are loans to the industrial sector, about 27% - consumer loans, over 15% - loans to SMEs, and more than 12% - catering and services. In terms of the volume of credit investments in these listed areas, Ardshinbank is in TOP-3. Ardshinbank completed the year 2019 with a net profit of 9.9 billion drams ($ 20.6 million, 2nd position) with a y-o-y growth of 53%, and ACBA-Credit Agricole Bank with a profit of 7.4 billion drams ($ 15.4 million, 5th position) with a y-o-y increase of 18.2%.
