Non-interest incomes from currency transactions remain main factor of  unprecedented increase in Armenian banks` profits

ArmInfo. Non-interest incomes from currency transactions remain the main factor of the unprecedented increase in the Armenian banks' profits, according to the data of the ARMINFO- compiled Express Ranking of Armenia Banks for September 30, 2022.  According to the data, the total net profits of the banks showed a  2.8-fold year-on-year increase, up to AMD 187.8 or $463mln at the  current exchange rate. 

Credit investments and other loans reached AMD 3,990bln ($9.8bln) or  a 3% year-one-year increase, with investments in securities totaling  AMD 1,500bln ($3.7bln) or a 25% increase. According to the agency's  experts, the factor of the high increase in the net profit was  obvious in the 2nd quarter of this year, with the trend continuing in  the 3rd quarter as well. The cause is a great number of people,  mostly Russians, who relocated their businesses and capital to  Armenia, where they are solving their housing and work-related  problems. 

Head of the ArmInfo Rating Service Karina Melikyan reported that  detailed information on the volume and dynamics of the profits from  currency transactions will be available later, based on the  supplements to balance-sheets, which contained entries on purchases  and sales and reassessment. However, banks' interim balance reports  show a very high increase in the total net profits from currency  transactions - 10-20-fold in the case of large banks, 5-7-fold  increase in the case of medium-sized banks and 2-4-fold increase in  the case of small banks. Considering the above, there is a nearly  hundred-per-cent probability that the greater part of the Armenian  banks' net profits in January-September 2022 was formed due to  currency transactions, which was also the case in the first half of  this year. 

On the other hand, the in the other balance-sheet figures of Armenian  banks show a rather moderate year- on-year increase. Specifically,  assets showed a 12% increase, up to AMD 7,700bln ($19bln), general  liabilities totaled AMD 6.5bln ($16bln) or a 9.1% increase, aggregate  capital totaled AMD 1,200bln ($3bln) or a 30% increase. 

Moreover, the increase in aggregate capital was mainly due to a 50.7%  increase in the accumulated profit, up to AMD 427.7bln ($1.1bln) and  a 26.2% increase in the authorized capital, up to AMD 698.8bln or  $1.7bln (due to capitalization of seven banks - ArmBusinessBank,  Inecobank, Evocabank, ACBA Bank, Armeconombank, Unibank, and  Ameriabank). In the general liabilities, the share of liabilities to  clients was over 66% or AMD 4,300bln ($10.7bln) (time and demand  deposits), with a 16.2% year-on-year increase. 

The quota fulfillment has improved. Specifically, the capital ratio  showed an average year-on-year increase of 25.08%, up to 28.55%  (against the required minimum of 12%), capital adequacy increased  from 23.25% ?? 27.35% (against the required minimum of 9%), current  ratio increased from 35.58% to 37.46% (against the required minimum  of 15%). Also, banks managed to improve their results in LCR (min  100%) and NSFR (min 100%) - up to 303.05% and 159.55% (against  262.10% and 148,61% respectively last year). 

Only the current ratio showed a decrease from 156.19% ?? 141.75% (min  60%).

The following TOP-5 banks in terms of assets are Ardshinbank,  Ameriabank, Armbusinessbank, ACBA Bank, and INECOBANK; in terms of  credit investments - Ameriabank, Ardshinbank, Armbusinessbank, ACBA  Bank, and Armeconombank; in terms of investments in securities,  ArmSwissBank, Ardshinbank, Armbusinessbank, Ameriabank, and  Artsakhbank; in terms of liabilities to clients, Ameriabank,  Ardshinbank, Armbusinessbank, ACBA Bank, and Conversebank; in terms  of aggregate capital Ameriabank, Armbusinessbank, Ardshinbank, ACBA  Bank and INECOBANK. 

As regards the net profit for January-September, the top-5 banks are  Ardshinbank, Ameriabank, Evocabank and INECOBANK and ACBA Bank. 

Seventeen banks are operating in Armenia now, including branches of  foreign banks - HSBC, VTB (Russia), Mellat (Iran), Byblos Bank  (Lebanon). Institutional investor, the EBRD, has its share only in  Ameriabank, with the Asian Development Bank (ADB) being another  shareholder.