ArmInfo. The banking system of Armenia increased its net profit in the first quarter of 2020 by 40% per annum to 23.3 billion drams ($ 46.3 million), while a year earlier a subsidence of 17.4% was recorded.
According to the Express-Ranking of Banks of Armenia, prepared by IC ArmInfo, this was observed against the background of an acceleration in the annual growth of credit investments and other loans from 16.2% to 20.4%, with a volume of 3.8 trillion drams or $ 7.5 billion.
According to the analysts of the national rating agency AmRating, judging by the higher growth rates of non-interest incomes than interest incomes - 26.3% versus 15.3%, it can be assumed that the upward support for profit came to a greater extent from the sharp activation of distance services (including . card), which resorted to banks during the emergency to ensure safety in a pandemic of the coronavirus. In a quarterly context, net profit also reversed the trend from downward to upward - from a 16.1% decline in the fourth quarter of 2019 to a 23.4% increase in the first quarter of 2020, which nevertheless is much inferior to the quarterly growth a year ago (53 %).
At the same time, the volume of credit investments and other loans showed a modest quarterly growth of 5.4%, which is slightly lower than the rate of the previous quarter (6%), but significantly higher than the growth of the first quarter of 2019 (1.8%).
According to AmRating analysts, banks managed to ensure high profit growth thanks to 2-3-month credit loans announced from March 13 the holidays. Namely, without this postponement, during the state of emergency, when a temporary ban was imposed on many types of activities, the quality of the loan portfolio would deteriorate significantly, which would naturally lead to a sagging profit. After the expiration of credit vacations, the situation is likely to become more complicated, since the stipulated payments of the deferred period are spread over the next months with a concomitant increase in the debt burden, the repayment of which is complicated by the economy that has not yet recovered and the uncertainty of the further development of the events associated with the coronavirus pandemic. Accumulated profit of the banking system by April 1 of this year reached 246.5 billion drams ($ 488.7 million), accelerating annual growth from 11% to 32%. This, coupled with the capitalization of four authorized capital banks, accelerated the annual increase in the total capital of the banking system from 8% to 10%, reaching the level of 862.1 billion drams ($ 1.7 billion). In particular, Ameriabank (in the 1st quarter of this year), Armeconombank (in the 1st quarter of this year), Armbusinessbank (in the 3rd quarter of 2019) and Armswissbank (in the 4th quarter of 2019) replenished the authorized capital, which ensured an annual growth of the total authorized capital of the system by 3% - up to 525.9 billion drams or $ 1.04 billion.
TOP-5 in total capital includes Ameriabank, Ardshinbank, ACBA-Credit Agricole Bank, Armswissbank and INECOBANK. Of these, four are in the top five in terms of net profit.
The regulatory total capital in the average market increased by April 1, 2020 by 12.4% to 48.6 billion drams ($ 96.3 million). The total capital adequacy level determined by the N1 / 2 standard with the required minimum of 12%, in annual terms decreased from 30.64% to 27% on average. In addition, in order to strengthen capital buffers, the Central Bank renewed the requirement on the capital adequacy ratio (N1 / 1 - min 10%) from 2020, which, on average, amounted to 30.6% in the market in the first quarter. It is noteworthy that the capital adequacy ratio previously appeared in the banks' accounts in 2005-2007 and then the required minimum was 8%, and now the Central Bank, having re-launched it, was forced, in the situation created due to the coronavirus, to revise the level down up to 9%.
It should be noted that 17 banks function in Armenia. Assets as of April 1 amounted to 5.9 trillion drams ($ 11.7 billion), of which 63.7% accounted for credit investments. And the total obligations as of this date amounted to 5.1 trillion drams ($ 10 billion), of which 67.9% are obligations to customers.
