Armenian banks prioritizing consumer lending over financing  the  economy

ArmInfo. Armenian banks have started to decrease the rate of lending to the economy, while increasing consumer lending at a faster rate.

In 2024, credit investments in the economy saw a growth slowdown from  23% to 18%, while retail loans experienced a significant acceleration  from 18% to 33%. Retail lending took over as the main as the main  driver of growth in the total loan portfolio during the year. This  credit activity not only maintained double- digit revenue growth, but  also slightly boosted growth rates, leading to a 61% increase in net  profit by the end of 2024,  reaching $915.8 million. This is  evidenced by analytical data from the Financial Rating of Armenian  Banks as of December 31, 2024, prepared by ArmInfo Investment Company  based on published financial reports and additionally requested  indicators.

As noted by the agency's analysts, stronger support for retail  lending was the key factor that allowed the overall loan portfolio to  accelerate in annual growth from 18% to 22%. This growth rate could  have been higher if not for the reduction in the volume of interbank  loans and some slowdown in the growth of lending to the economy.  Consequently, the total volume of credit investments reached $17.7  billion. Of this amount, 51% or $9 billion were corporate loans, more  than 43% or $7.6 billion were retail loans, and 6% or $1.1 billion  were interbank loans/deposits. 

Total banking assets reached $27.8 billion, experiencing a sharp  increase in annual growth from 9.4% to 20%, This growth was  attributed not only to lending activity, but also to notable  improvements in  the following key items: investments in securities -  an exit from a 3.5% decline to an 18.2% growth (to $5.2 billion),  balances on correspondent accounts in the Central Bank of the  Republic of Armenia - an exit from a 24.3% decline to a 22.3% growth  (to $2.2 billion), balances on nostro accounts in banks - an exit  from a 3% decline to an 11% growth (to $759.6 million), cash  reserves- an exit from a 5.4% decline to a 10% growth (to $590.9  million). However, there was  a slight  slowdown in annual growth for  non-dominant asset items: balances on impersonal metal accounts -  from 3.8 times to 3% (up to $2 million), and fixed assets - from 11%  to 8% (up to $537.1 million).