ArmInfo. The level of profitability of the Armenian banking system is quite low. This assessment of the UBA was announced on May 13 at a press conference by the Executive Director of the Union of Banks of Armenia Seyran Sargsyan, explaining that the level of profitability of the banking system is determined by such efficiency ratios as return on equity (ROE) and return on assets (ROA).
In particular, he noted that at the end of 2021, ROE was 9.5%, having not undergone significant changes in the Q1 this year, and ROA fluctuated between 1.2-1.3%. In this context, the head of the UBA considered it appropriate to mention Georgia as an example, where the level of profitability of the banking system is 24.8%. "This is a significant difference. But it is understandable, because the risks and the uncertainty that we have, led to an increase in costs, which keeps profitability at a low level", Sargsyan said.
At the same time, he said that the profit of the Armenian banking system in Q1 2022 amounted to 30.8 billion drams, having increased by 58.6% or 11.4 billion drams year-on-year. Sargsyan also presented the final data on the level of capitalization of the Armenian banking system, noting that this indicator is a guarantee of stability and overcoming stressful situations. The total capital of Armenian banks has crossed the threshold of 1.1 trillion drams, having increased by 15.4% over the quarter or by 147 billion drams, with a y-o-y growth of 20.4%.
Sargsyan mentioned assets as another important indicator, which increased by 1.4% or 97 billion drams over the quarter, and by 7.6% year-on-year, reaching 7.2 trillion drams. At the same time, he noted that at the end of 2021, assets almost exceeded GDP, amounting to 101.30% (against 54.9% in 2011).
Speaking about the standards, the head of the UBA touched upon the level of capital adequacy (ratio to risk-weighted assets), which reached 24.6% with a minimum standard of 9%, and the level of total capital adequacy, which amounted to 26.1% (with a minimum standard of 12%). To this, he added that the level of general liquidity (the ratio of highly liquid assets to total assets) amounted to 35.58% (with a minimum standard of 15%), and the level of current liquidity (the ratio of highly liquid assets to demand liabilities) amounted to 156.19% (with standard of at least 60%).
