ArmInfo.

ArmInfo.

ArmInfo.At the meeting on 27^th of August this year, the Board of the Central Bank of the Republic of Armenia granted its preliminary approval for Ardshinbank CJSC to acquire 75% or more of direct significant stake in HSBC Bank Armenia. Prior to this, on 6^th of June the Commission for the Protection of Competition also approved the concentration of Ardshinbank and HSBC Bank Armenia.

ArmInfo. The banking system of Armenia has begun actively lending to the economy and population, but the industrial sector remains the 'Achilles heel' of the loan  portfolio, according to the data of the Financial Rating of Banks of  Armenia as of March 31, 2024, prepared by ArmInfo.

ArmInfo. The HSBC group has been moving its capital and focusing on its preferred markets, as has been the policy in recent years. Only since 2021, as noted by the Chairman of the Union of Banks of Armenia (UBA) Daniel Azatyan during a press conference, the Group has withdrawn from 7 countries, including retail lending in France, the USA, Greece, etc.

ArmInfo. The likelihood of attracting a new international brand to the Armenian financial market  is quite low. Economist Haykaz Fanyan expressed a similar opinion on his Facebook page, commenting on the HSBC's withdrawal from Armenian market.

ArmInfo. Armenian banks are reviving their credit policy after "resting on immigrants' laurels".  This must be done quickly and competently in order to maintain profit growth and avoid its serious decline.

ArmInfo.

ArmInfo. The profit growth rates of Armenian banks slowed down significantly amid the ongoing serious slowdown in lending to the economy. Thus, the net profit of Armenian  banks increased by 24.8% per annum inH1 2023 (against a 2.8-fold jump  in the same period in 2022), reaching 73.6 billion drams ($367.8  million), while slowing down strongly in quarterly growth from  3.4-fold to 5.2% alone.

ArmInfo.

ArmInfo.

ArmInfo.The upward trend in real estate prices and rising interest rates will reduce the pace of mortgage lending growth. This is the opinion of the analysts of the  AmRating National Rating Agency affiliated with ArmInfo, referring to  the extremely high growth rates of the mortgage market, which reached  42% in y-o-y terms.

ArmInfo.In Armenia, leasing transactions are rapidly gaining momentum, the total volume of which by April 2022 exceeded 64 billion drams ($132 million), having  increased by 38.4% year-on-year. This is evidenced by the data as of  March 31, 2022 of the "Financial Rating of Banks of Armenia" and  "Ranking of Credit Companies of Armenia", prepared by ArmInfo IC.

ArmInfo.Armenia has entered a stage of lending stagnation. Evidence thereof is a considerable increase in bank profits due to highly active foreign exchange and  securities transactions rather than due to the major income item,  lending.

ArmInfo.In Q1 2022, the inflow of transfers from individuals to Armenia increased by 38.2% per annum or by $155 million, reaching $561 million, Deputy Executive Director  of the Union of Banks of Armenia Arman Sargsyan said during a press  conference on May 13.

ArmInfo.Despite the fact that Armenia is now seen as a "safe haven" for the relocation of a considerable number of small and medium-sized businesses, especially in the field of IT, the aggravation of the external background associated with sanctions  restrictions could create serious problems in the medium term.

ArmInfo.The forecasts of international organizations and rating agencies on the growth of the Armenian economy in 2022 (1.5 -1.6%) are theoretically correct and sustained,  but at the same time they do not fully take into account the changing  structure of the Armenian economy, namely, the process of transition  from the so-called demand economy to the supply economy, albeit with  weakly expressed characteristics.

ArmInfo. The accelerated growth of non-performing loans (NPL) continues in the banking system of Armenia, pushing profit, and thereby depriving capital buffers of  the opportunity to replenish.

ArmInfo.In Armenia, fees on travel insurance reached a significant 70% growth in the first half of 2021 (from a significant 46.4% decline a year earlier), reaching a  volume of 235.9 million drams ($ 475.8 thousand). Such growth,  associated with some activation of outbound tourism, allowed not only  to approach the volume of two years ago, but also to return the 1%  share of travel insurance in the total portfolio of premiums.

ArmInfo.The high growth of the mortgage portfolio by June 2021 by 37.2% per annum to 544.2 billion drams ($ 1.05 billion) supported the loan portfolio of the Armenian  banking system in 6.4% growth, exceeding the absolute value of 3.6  trillion drams ($ 6.9 billion). The growth of mortgages increased its  share in the total loan portfolio of banks from 11.7% last year to  the current 15.1%. This is evidenced by the data of the RA Central  Bank.