Armenian banks managed to significantly increase net profit in 2021

ArmInfo. Armenian banks managed to improve the dynamics of net profit in 2021 with a 54% growth (from a 22.3% decline in 2020). In absolute terms, the total profit of the  system amounted to 87.3 billion drams or $181.8 million.

According to the Express Ranking of Banks of Armenia prepared by  ArmInfo IC , as of December 31, 2021, only four banks recorded a  decline in net profit for the reporting year, but the upward dynamics  of the remaining 13 banks turned out to be much more significant,  which made it possible to bring the y-o-y trend of the total  indicator for the market to tangible growth.

But the slowdown in the y-o-y growth of assets is still ongoing -  from 14.5% in 2020 to 6.7% in 2021, the absolute value of which has  already exceeded 7 trillion drams ($14.7 billion). In their  structure, the share of credit investments and other loans accounted  for 56.7% or 4.02 trillion drams ($8.4 billion, with a y-o-y decline  of 1%). The share of investments in securities accounted for 18% or  1.3 trillion drams ($2.7 billion, with a y-o-y growth of 26.2%).

Total liabilities also slowed down y-o-y growth - from 16.1% in 2020  to 6.5% in 2021, exceeding 6.1 trillion drams ($12.8 billion). In  their structure, 63% or 3.9 trillion drams are accounted for by  liabilities to customers, 33% or more than 2 trillion drams - by  liabilities to banks and other organizations (taking into account the  attraction from the placement of corporate bonds), and the growth of  both indicators in y-o-y terms slowed down to3% and 8%, respectively. 

The total capital of the banking system slowed down y-o-y growth from  5.6% in 2020 to 3.4% in 2021, amounting to 958.2 billion drams  ($1.996 billion). In its structure, 58.7% or 562.5 billion drams  ($1.2 billion) falls to the share of authorized capital, the y-o-y  growth of which accelerated from 1.6% in 2020 to 5.4% in 2021, due to  the replenishment of authorized funds by four banks (ACBA Bank ,  Ameriabank, Unibank and Armeconombank). The share of accumulated  profit in the total capital accounted for 32% or 306.2 billion drams  ($637.8 million), with an acceleration of y-o-yl growth from 16.9% in  2020 to 18.2% in 2021.

It is noteworthy that in 2021 the banks were able to increase their  regulatory indicators as well.  It is noteworthy that in 2021 the  banks were able to increase their regulatory indicators as well.  Thus, the capital adequacy ratio (N1/1 min 9%) increased on average  in the market from 22.67% in 2020 to 23.12% in 2021, the total  capital adequacy ratio (N1/2 min 12%) - from 24, 21% in 2020 to  24.88% in 2021, total liquidity ratio (N2/1 min 15%) - from 29.46% in  2020 to 35.7% in 2021, current liquidity ratio (N2/2 min 60%) - from  145.57% in 2020 to 157.79% in 2021. At the same time, banks managed  to improve their results on the newly introduced short-term (LCR min  100%) and long-term (NSFR min 100%) liquidity ratios - up to 354.2%  and 154.11%, respectively.  The TOP-5 in terms of assets includes:  Ameriabank, Ardshinbank, Armbusinessbank, ACBA Bank and INECOBANK, in  terms of credit investments - Ameriabank, Armbusinessbank,  Ardshinbank, ACBA Bank and Converse Bank, in terms of investments in  securities - Armswissbank, Ardshinbank, Armbusinessbank, Ameriabank  and INECOBANK, on liabilities to clients - Armbusinessbank,  Ameriabank, Ardshinbank, ACBA Bank and VTB Bank (Armenia), on total  capital - Ameriabank, Ardshinbank, ACBA Bank, Armswissbank and  INECOBANK. And in terms of net profit for 2021, Ameriabank continues  to lead the top five, followed by Ardshinbank, ACBA Bank, INECOBANK  and Armswissbank.

It should be noted that 17 banks operate in Armenia, including  subsidiaries of foreign banks: HSBC (UK), VTB (RF), Mellat (Iran),  Byblos Bank (Lebanon). International institutional investors  represented by the European Bank for Reconstruction and Development  (EBRD) and the Asian Development Bank (ADB) are present in the  capital of only one  bank- Ameriabank.