Tuesday, May 26 2020 18:31
Alina Hovhannisyan

UBA: Armenian banking system will successfully cope with all the  difficulties of the post-coronavirus period

UBA: Armenian banking system will successfully cope with all the  difficulties of the post-coronavirus period

ArmInfo.n. The last month of the first quarter of 2020 coincided with the beginning of the implementation of measures to prevent the spread of coronavirus, which could not but affect the indicators of the banking system of  Armenia, development trends, and the economy as a whole.  

The Executive Director of the Union of Banks of Armenia (UBA) Seyran  Sargsyan stated this during an online press conference on May 26,  presenting the results of the first quarter of 2020.  According to  him, the total capital of the banking system increased over the  reporting quarter by 2.1%, amounting to 862 billion drams. Such  dynamics was triggered by an increase in the share capital of two  banks. In comparison with the 2014 indicator, the total capital of  the banking system of Armenia almost doubled.

By April 1, the assets of the banking system amounted to 5.9 trillion  drams (with a quarterly growth of 1.8%), of which 3.7 trillion drams  accounted for credit investments (with a quarterly growth of 0.5%).   By credit industry, there are segments for which there was a decline  in volumes. Thus, lending to the industrial sector decreased over  quarter by 7%, and the share in the total loan portfolio amounted to  16% or 539 billion drams, transport and communications - a decline of  13% with a share of 3% or 110.8 billion drams, the trade sector - a  decline of 1% with a share of 15% or 501.1 billion drams, the  financial sector - a decline of 16% with a share of 7% or 228.7  billion drams. At the same time, the quarterly growth in lending  volumes was recorded for: mortgage - by 10% - up to 394.9 billion  drams (the share in the portfolio is 12%), the agricultural sector -  by 6% to 160.5 billion drams (5%), the construction sector - by 11%  up to 213.7 billion drams (6%), consumer loans - 4% up to 951.9  billion drams (28%), services - by 4% to 290.6 billion drams (9%). In  this context, S. Sargsyan emphasized that 50.4% of the loans were  directed to finance the economy, 40% - to loans to individuals, and  the rest fell to interbank loans / deposits.  At the same time, he  said that following the results of the first quarter of this year in  the loan portfolio of the banking system, the shares of the currency  and dram components were almost equal - 51.8% and 48.2% (against  50.9% and 49.1% in 2019), I noticed that such a picture was last  observed in 2009 (51% and 49%).  "The share of the foreign exchange  component in the loan portfolio for the reporting quarter increased a  little, due to the jump in March of the exchange rate, which reached  504.47 dr / $ 1 by the end of the month. But I think that, according  to today's exchange rate, the shares of foreign exchange and dram  components have almost become equal again" "he remarked.

According to the results of the first quarter, the total liabilities  of the banking system grew by 1.7%, exceeding 5 trillion drams. At  the same time, liabilities to customers for the reporting quarter  decreased by 1.4% to 3.4 trillion. drams, but in annual terms, this  figure increased by 18.6%.  Regarding deposits, S. Sargsyan informed  that there is a quarterly decline in volumes by 1.1% to 3.5 trillion.  drams. At the same time, deposits of residents (individuals and legal  entities) increased by 2.5% to 2.6 trillion drams, which indicates  that the negative dynamics of the total deposit portfolio comes from  a decrease in deposits of non-residents, which account for 900  billion drams. "This is an important indicator that indicates the  trust of non-residents in the banking system of Armenia, and their  preference to keep their funds in Armenian banks," S. Sargsyan  emphasized. In general, according to him, fixed-term deposits  increased over the quarter by 2.5% to 1.8 trillion. drams, and on  demand - decreased by 3% to 774 billion drams. In the structure of  deposits for 2009-2020, the gap between the currency and dram  components narrowed in favor of the dram component, in particular,  the share of the currency component for the 1st quarter decreased  from 57.6% to 57% with the growth of dram from 42.4% to 43%. "In  comparison with 2009, we can talk about progress, since then the  share of the currency component reached 73%," he said.  S. Sargsyan  also attributed the profit to the positive results of the banking  system, which in the I quarter of 2020 increased by 44.7% per annum,  amounting to 23.3 billion drams.

He drew attention to the indicators of capitalization and liquidity:  the ratio of total capital to assets amounted to 14.6% (with  normative minimum of 12%), the ratio of total capital to liabilities  is 17.1%; the ratio of highly liquid assets to total assets - 31.6%  (standard liquidity ratio - min 15%), the ratio of highly liquid  assets to demand liabilities - 166.2% (current liquidity ratio - min  60%). Answering the question of ArmInfo, the head of UBA noted that  the level of capitalization and liquidity indicate the degree of  resistance and the ability of the banking system to withstand  stressful situations. "Even in the case of a worse scenario, studies  show that the risks are manageable and I hope that the banking system  will successfully overcome all the difficulties of the  post-coronavirus period," he stressed.

According to S. Sargsyan, the growing role of the banking system in  the development of the country's economy is evidenced by the growth  of indicators such as the ratio of assets to GDP - from 82.6% in 2018  to 88.6% in 2019, loans to GDP - from 54.1 % to 57.1%, deposits to  GDP - from 47.7% to 53.4%, against 54.9%, 35.4% and 25.7% in 2011,  respectively.

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