Bank lending to the Armenian economy showed a significant increase of 25.5% in 2024 - Central Bank head
YEREVAN, June 11. /ARKA/. In 2024, the loan portfolio provided to the economy by the banking system grew significantly - by about 25.5%, and the growth of the deposit portfolio of the banking system amounted to 14%, said the head of the republic's Central Bank Martin Galstyan.
"It is worth noting that the growth of loans was observed in almost all main areas," he said, presenting the financial stability report for 2024.
According to the report, the growth of loans in the mortgage sector amounted to 37.4%, industry - 33.2%, construction - 32.7%, consumer lending - 28.6%, agriculture - 21%. The annual growth of loans provided to individuals amounted to 22.9%, to legal entities - 22.4%.
According to Galstyan, high growth rates were recorded in both household and business lending during the year.
"The high growth in household lending was almost equally driven by the growth in both consumer and mortgage loans. As for the growth in business loans, the largest contribution here was made by loans provided to industry and construction," he said.
There was also high demand for consumer loans and growth in lending during the year. "The latter can be explained by the growth in income in the economy, the processes of correction and mutual complementarity of the reduction or moderate growth of consumer lending in previous years, as well as the need to purchase durable goods for new apartments against the backdrop of high activity in the real estate market," he said.
The head of the Central Bank noted that the growth in mortgage lending also remained at a high level, especially accelerating in the last quarter of the year, which is likely due to the completion of some programs in December or since January. Let us recall that, in accordance with the changes in legislation, the income tax refund under the mortgage lending program has been discontinued for loans received after January 1, 2025, if the property is located or is being built within the administrative borders of Yerevan.
Galstyan also noted that in the context of growing activity in the credit market, there was an increase in financial intermediation.
"In the context of high growth in consumer and mortgage lending, households' debt burden has increased. At the same time, the growth in economic income in recent years has been accompanied by a consistent increase in the terms of credit obligations, which has allowed households to maintain a relatively stable level of debt servicing," he explained.
According to the head of the regulator, despite the reduction in the key interest rate, loan rates have not yet responded fully, which is explained by both high demand for loans and significant risks caused by geopolitical uncertainty.
"In the context of growing income and high credit activity, the share of overdue loans and credit losses continued to decline and remained below average levels. However, due to the possible accumulation of risks in individual lending sectors and the current high global uncertainty, credit risk remains dominant,” Galstyan said.
Answering a question from ARKA agency, he explained that the share of non-performing loans in the total portfolio is 1.2%
According to the Union of Banks of Armenia, the loan portfolio of the RA banking system increased by 1.2 billion drams or 24% to 6.4 billion drams in 2024. ($1 - 383.54 drams) -0-
