UBA: Results of banks` assistance programs in emergency conditions  summed up

ArmInfo.  The banking system of Armenia, amid the coronavirus pandemic, was one of the first to respond on its own initiative and take steps to support its clients,  starting from March this year providing diversified assistance to  individuals and legal entities. In cooperation with the Central Bank,  mechanisms and regulations were formed, the application of which made  it possible to apply an individual approach to borrowers, as well as  to avoid the deterioration of the credit history due to  non-fulfillment of payments by borrowers under loan agreements. This  is stated in the message of the Union of Banks of Armenia (UBA).   Loan Payment Holidays

Armenian banks in March-May granted loan payment holidays or revised  the terms of existing loans to borrowers - individuals and legal  entities affected by measures aimed at preventing the spread of the  coronavirus. The opportunity to revise loan agreements during the  reporting period was used by about 550 thousand individuals and 17.4  thousand legal entities, or about 30% of bank clients. In total,  about 980 thousand loan agreements were revised for a total of 1.3  trillion drams, and the volume of deferred payments amounted to 100  billion drams.

Participation in anti-crisis government programs Banks, in parallel  with the loan payment holidays initiative, joined the anti-crisis  government programs. In particular, according to the first and second  programs, banks satisfied 25,885 loan applications, providing over  AMD 119 billion. Namely, within the framework of the first  anti-crisis program, according to which, on preferential terms,  companies are provided loans for the purchase of raw materials,  equipment, imports of food and medicines, as well as for the payment  of salaries, taxes, utility costs, 1,209 loan applications were  satisfied for the amount of about 76.5 billion drams. Under the  second anti-crisis program on agriculture, 24 676 loan applications  for 43.1 billion drams have been satisfied.

Other assistance programs by banks During the reporting period, banks  also implemented a number of other assistance programs, with a total  value of almost 260 million AMD.

1.In order to encourage the medical staff, purchase the necessary  medical supplies and equipment, as well as improve conditions in the  buildings of medical centers, 197.235 million drams were provided to  the Ministry of Health.

2. Within the framework of social assistance programs elderly and  vulnerable groups were provided with 29 million drams. Beneficiaries  of these programs were 72 families from 9 communities of Tavush  region.  Besides, the amount was donated to the Armenian Red Cross,  which taking into account the extremely urgent humanitarian needs of  the most vulnerable groups of the population, took medium and  long-term measures to fulfill them. In addition, some banks purchased  food products for their clients and provided financial assistance.

3. For organizing the return of Russian citizens to their homeland by  bus, 1.740 million drams were allocated.

4. For the needs of distance learning, during the coronavirus  pandemic, 31.645 million drams were allocated. Within the framework  of this assistance, 50 computers were provided to children of Lori  region and border communities of Tavush region, 150 computers - to  students of socially vulnerable communities of Armenia and 112  tablets -to children of a vulnerable group who are unable to  participate in distance learning courses organized by UNICEF. Part of  the funding was also directed to the program "Improving the digital  literacy of people affected by coronavirus" and children in  orphanages.

Other assistance to clients - Free delivery, change or reissue of  payment cards without a credit line; - Zeroing commissions for  clients' transactions through payment systems; - Possibility of  online ordering of a certificate on compensation of income tax on  mortgage loans submitted to the RA State Revenue Committee.

Banks of Armenia, adhering to the principles of social  responsibility, will continue to strengthen the partnerships with  clients formed and based on mutual trust.

Meanwhile, it should be reminded that the Chairman of the Central  Bank of Armenia Martin Galstyan stated at the beginning of September:  "Due to the three-month loan payment holidays, the Armenian banking  system did not receive AMD 100 billion in repayments on loans. It is  predicted that the share of non-performing loans (NPL) may exceed  10%, but it is difficult to predict when this will happen - in the  current year or in a more distant period. " He explained that,  according to the Central Bank's estimates, the growth of NPL in the  total loan portfolio of the banking system is expected due to the  introduction of credit payment holidays, as well as a decrease in  citizens' incomes due to the epidemic crisis. According to the  Financial Rating of Banks of Armenia as of June 30, 2020, prepared by  ArmInfo IC, the total loan portfolio of banks exceeded AMD 4 trillion  ($ 8.3 million), and assets reached AMD 6 trillion ($ 12.4 million),  while the acceleration of the y-o-y growth of loans from 11% to 19%  was accompanied by a slowdown in asset growth from 17% to 14%, with a  strongly weakened quarterly growth in both cases. At the same time,  the growth of non-performing loans resumed and the share of NPL in  the loan portfolio grew in the Q2 from 8% to 8.3%, and in assets from  5.2% to 6.3% (taking into account bad loans, which the Central Bank  does not take into account writing them off balance). An 8.2% y-o-y  growth in overdue loans (with a 10.1% quarterly growth), in turn, did  not allow profits to accelerate growth rates: net profit, amounting  to 40.6 billion drams ($ 84.2 million), increased by 6% per annum,  similar to the rate of a year ago.  It should be noted that in  Armenia since March 16, as part of the fight against the spread of  coronavirus, a State of Emergency was introduced, which was extended  monthly and was lifted from September 12, while maintaining  restrictive measures.