On 31 January the
Union of Banks of Armenia (Հայաստանի
բանկերի միություն) held a conference to present a summary of the results for the
country’s commercial banking sector in 2012.
The highlights are given below. (As
of 31 Dec. 2012 one euro equaled 532.10
AMD.)
Capital: During 2012 the total capital of Armenia Armenia
Assets: Total assets at Armenia
Loans: The total loan portfolio of the commercial banks increased 21.1% in
2012 to finish the year at 1,517.95 bln AMD (€ 2,852.7 mln).
NPLs: The proportion of non-performing loans to total loans finished the year
at 3.6%.
Liabilities: Total liabilities of the commercial banks grew 19.7%
during 2012 to finish the year at 2,002.66 bln AMD (€ 3,763.7 mln).
Deposits: In 2012 total deposits increased 7.4% to 1,132.00 bln AMD (€ 2,127.4
mln). The ratio of total deposits to GDP
increased from 25.7% at end-2011 to 27.3% at end-2012.
Profits: During 2012 total profits for commercial banks
increased 15.0% to 42.696 bln AMD (€ 80.24 mln). ROA in 2012 was 2.0%, down from 2.4% in 2011,
while ROE in 2012 was 11.2%, down from 12.6% in 2011.
Branches: In 2012 the number of bank branches in Armenia
(N.B.: For the
period between December 2011 and December 2012 the Central Bank of Armenia
Sources:
Հայաստանի բանկերի միություն
- Հայաստանի բանկային համակարգի զարգացումները
2012 թվականի ընթացքում (2013-01-31)
CBA: Statistical Data: Inflation: Core
inflation
ArmStat: Consumer price index in the Republic
of Armenia in January-December 2012 (2012-12-28)
In other news, on 5
January the International Monetary Fund published a staff report on Armenia 20
November 2012 following a visit to Yerevan Armenia
RECENT
ECONOMIC DEVELOPMENTS
[...]
6. Credit growth has been strong,
especially in foreign currency (FX), but the banking sector remains robust. Credit grew by 24 percent yoy
through August, with FX loans growing by 27 percent. Banks remain well
capitalized, with a capital ratio of almost 17 percent, and no bank below 12
percent. Despite the strong growth, the credit-to-GDP ratio remains relatively
low.
[...]
FIFTH
REVIEWS UNDER THE EFF/ECF
[...]
A.
Monetary and Exchange Policy and the Financial Sector
[...]
13. The CBA is continuing efforts to
strengthen the interest rate channel (LOI ¶11). Interbank interest rates continued to
exhibit significant volatility in mid- 2012, and staff urged the CBA to further
strengthen operations to increase the relevance of the policy rate. The CBA
noted that the width of the interest rate corridor had been reduced from 600 to
400 basis points to reinforce the transmission mechanism; the corridor was
further narrowed to 300 bps in early November. The CBA also pledged to step up
fine-tuning operations while strengthening communications to better anchor expectations.
14. The banking system is sound,
although it remains heavily dollarized. With high capital adequacy and dram liquidity ratios and
moderate rates of NPLs and profitability, banks remain sound. Nonetheless,
since the 2009 crisis, credit has become increasingly dollarized, and almost two-thirds
of loans are denominated in FX (up nine percentage points from a year ago).2 Staff advised the CBA to assess possible policy actions,
including expanding the difference between reserve requirements for FX and dram
liabilities and further adjusting capital ratios for FX-denominated loans.
15. The
CBA is improving the regulatory and supervisory framework in line with FSAP recommendations
(LOI ¶12–13).3 The CBA introduced a new prudential norm for bank FX liquidity
ratios, effective in January 2013, and is committed to gradually increasing
these ratios. The CBA also required banks to report on potential currency
mismatches of large borrowers. Staff suggested using this new information to
strengthen the assessment of sectoral risks and tailor stress-testing guidance
to banks. In line with FSAP recommendations, the CBA will require banks to
immediately report changes that have a material adverse impact and will review
calculation of large exposures to determine whether treatment is in line with
best practice. The CBA and government will assess whether changes are needed to
streamline the execution of collateral, following recent reforms to the system
of property registration.
2 The increase in credit dollarization has occurred even as
the CBA increased loan-loss provisioning requirements and capital risk weights
for FX loans in 2010. The loan dollarization rise may have been due in part to
bank efforts to limit currency mismatches, particularly as a significant share
of funding attracted by banks has been in foreign currency and after the CBA’s
shift of the currency of denomination of reserve requirements for FX
liabilities to dram. As banks converted these required reserves to dram, they
may have rebalanced the currency match on their balance sheets by increasing FX
loans.
3 The FSAP Update was considered by the IMF Executive Board in
June 2012.
Source:
Mark Pleas
[contact]
