Armenia’s banking sector and economic revolution
18.03.2019,
16:46
In February 2019, Armenian Prime Minister Nikol Pashinyan urged the local commercial banks to spur the economic revolution. Overall, banks in Armenia have been playing an important role in the development of the country's economy, and this role is growing now at a faster rate.
YEREVAN, March 18. /ARKA/. In February 2019, Armenian Prime Minister Nikol Pashinyan urged the local commercial banks to spur the economic revolution. Overall, banks in Armenia have been playing an important role in the development of the country's economy, and this role is growing now at a faster rate.
Over the past 10 years the ratio of loans to GDP has almost tripled making 51.6% at the end of 2018, up from 17.8% in 2008. This indicator is now at the historically high level and is one of the highest among several former Soviet republics, which make the Commonwealth of Independent states (CIS).
Local banks finance large-scale infrastructure and other projects, as well as small and medium businesses. The banking sector is the largest and almost uncontested investor in the country's economy, and there are a number of important reasons behind it.
The first reason is the underdeveloped or insufficient solvency of the other financial players when opposed to the banks, which have proved their reliability and resistance to financial shocks.
At the same time, foreign direct investment (FDI) as a source of business financing, especially in recent years, leaves much to be desired. According to the latest World Bank data (for 2017), FDI amounted to only $ 249.7 million. A retrospective analysis of this indicator shows that the highest amount of FDI inflow was 10 years ago, when it stood at about $1 billion. At the same time, lending by banks in 2018 exceeded 3 trillion drams or about 6.2 billion US dollars.
Thus, out of 17 banks in the country Ameriabank is now the largest investor in the country’s economic growth. It is the leading bank in terms of the aggregate amount of lending and lending to private sector.
In 2018 Ameriabank's loan portfolio amounted to 547.9 billion drams or 17.8% of the total amount of lending provided by all 17 Armenia-based banks. In 2018 alone Ameriabank’s lending grew by 14.2%. The volume of lending to private enterprises by Ameriabank at the end of last year stood at 440.2 billion drams. Moreover, the bank was the leading lender to large enterprises, providing them with a total of 346.6 billion drams, and also 93.6 billion drams to SME.
Ameriabank's loan portfolio is diversified. The bank provides loans to various sectors of the economy. In particular, the industry lending at the end of 2018 amounted to 87.2 billion drams, agriculture lending – at 13.1 billion drams, 22.5 billion drams worth lending was provided to the construction sector, 48.2 billion drams to transport and communications, 81.7 billion drams to trade and 20.7 billion drams to services.
It should be noted that after the Central Bank enforced an increased minimum capital requirement, Ameriabank replenished its total capital to 89.7 billion drams or about 184 million US dollars. Today, it is the largest figure for the whole banking sector of Armenia. This allows the bank to expand the financing of the Armenian economy and make a significant contribution to its development. -0-
Over the past 10 years the ratio of loans to GDP has almost tripled making 51.6% at the end of 2018, up from 17.8% in 2008. This indicator is now at the historically high level and is one of the highest among several former Soviet republics, which make the Commonwealth of Independent states (CIS).
Local banks finance large-scale infrastructure and other projects, as well as small and medium businesses. The banking sector is the largest and almost uncontested investor in the country's economy, and there are a number of important reasons behind it.
The first reason is the underdeveloped or insufficient solvency of the other financial players when opposed to the banks, which have proved their reliability and resistance to financial shocks.
At the same time, foreign direct investment (FDI) as a source of business financing, especially in recent years, leaves much to be desired. According to the latest World Bank data (for 2017), FDI amounted to only $ 249.7 million. A retrospective analysis of this indicator shows that the highest amount of FDI inflow was 10 years ago, when it stood at about $1 billion. At the same time, lending by banks in 2018 exceeded 3 trillion drams or about 6.2 billion US dollars.
Thus, out of 17 banks in the country Ameriabank is now the largest investor in the country’s economic growth. It is the leading bank in terms of the aggregate amount of lending and lending to private sector.
In 2018 Ameriabank's loan portfolio amounted to 547.9 billion drams or 17.8% of the total amount of lending provided by all 17 Armenia-based banks. In 2018 alone Ameriabank’s lending grew by 14.2%. The volume of lending to private enterprises by Ameriabank at the end of last year stood at 440.2 billion drams. Moreover, the bank was the leading lender to large enterprises, providing them with a total of 346.6 billion drams, and also 93.6 billion drams to SME.
Ameriabank's loan portfolio is diversified. The bank provides loans to various sectors of the economy. In particular, the industry lending at the end of 2018 amounted to 87.2 billion drams, agriculture lending – at 13.1 billion drams, 22.5 billion drams worth lending was provided to the construction sector, 48.2 billion drams to transport and communications, 81.7 billion drams to trade and 20.7 billion drams to services.
It should be noted that after the Central Bank enforced an increased minimum capital requirement, Ameriabank replenished its total capital to 89.7 billion drams or about 184 million US dollars. Today, it is the largest figure for the whole banking sector of Armenia. This allows the bank to expand the financing of the Armenian economy and make a significant contribution to its development. -0-
