ArmInfo.The Union of Banks of Armenia (UBA) does not see any serious reasons for concern regarding the level of non-performing loans (NPL) in the banking system of Armenia. Executive Director of the UBA Seyran Sargsyan stated this during a press conference on May 19.
In particular, he said that at the end of Q1 2021, the share of overdue loans in the total loan portfolio of the banking system was 7.1%, which is slightly higher than at the beginning of this year.
Sargsyan explained the growth of the NPL share by granting to borrowers on a voluntary basis by the commercial banks of Armenia credit holidays, deferred payments. "Despite the growth in non-performing loans, Armenia has historically always been a country with one of the lowest NPL rates. Today's indicators are in a manageable range, and the banking system of Armenia is able to overcome the risks arising from this, " the executive director of the UBA said.
He also stressed that such a policy of banks will undoubtedly affect the level of the loan portfolio of the banking system and the level of profit, the subsidence of which in y-o-y terms by 17% reduced it by the end of the Q1 2021 to 19.4 billion drams.
"Among the borrowers who took advantage of the credit holidays, there may be those who will not be able to fulfill their debt obligations, which cannot but affect the loan portfolio and the profits of banks," he said.
Sargsyan also said that in total, such assistance was provided by Armenian commercial banks to 30% of borrowers.
Meanwhile, according to the Financial Rating of Banks of Armenia as of March 31, 2021, prepared by ArmInfo IC, the share of non-performing loans (NPL, taking into account the high-risk categories) has already reached 10.5% in the loan portfolio and 6.8% in assets, against 7.6% and 5.2% respectively a year earlier. In absolute terms, the volume of overdue loans increased by 48% per annum. About 66% of NPL falls on dubious and high-risk categories, with the last tangible dominant growing in volume. Broken down by industry, over 47% of overdue loans "stuck" in consumer loans (including mortgages), with a y- o-y growth of 49% in the volume of non-performing loans. The second place in terms of NPL share is occupied by the trade sector, where over 14% of non-performing loans (mostly bad) have accumulated, with a y-o-y growth of 17.7%. The third place in terms of the share of NPL is occupied by agricultural loans - about 10%, with a y-o-y decline in the volume of non-performing loans by 8.1%. Then, according to the share of NPL, there are loans in the sector of catering and services - about 8%, with a y-o-y volume growth of 3.1%. The share of NPL in loans to the industrial sector is slightly lower - about 7%, with a y-o- y growth of 4.9%. The smallest delinquencies accumulated in loans to the construction sector (over 4%), with a y-o-y growth of 0.7% in volume.
