Tigran Jrbashyan: Banking Sector Needs to Raise Efficiency
Media Room

Efficiency ratio of Armenian banks currently being very low, their future will largely depend on whether or not they are able to employ adequate mechanisms to raise efficiency. Those banks whose ratio is particularly low will face serious challenges while trying to increase their capital and withstand competition, said Mr. Tigran Jrbashyan, Development Director at Ameriabank, during press conference on the key indicators and performance of the Armenian banking system in 2014. For the first time in a new format, this report was presented by the bank’s management to summarize the performance and achievements not only of Ameriabank, but the whole banking system of the country for the recent 3 years

Overall, during the last 3 years our banking system has been developing extensively; while the volume of lending grew, profitability declined (as demonstrated by several key financial indicators of banks). With “assets to GDP” ratio about 75.8% and “deposits to GDP” over 37%, Armenia is still behind many peer countries, even though certain improvement has been reported recently. Our assets earn us less profit than in other countries, said Jrbashyan.

He also said that the most crucial indicator to raise capital – the ROE – in Armenia was generally on a low level, too. According to him, if our neighbor countries boast two-digit figures, in Armenia it is only 6.9%. Expenses in Armenian banks tend to “devour” most of the income, whereas in big banks the level of expenses is lower which is only to be expected given that the bigger the bank the more economically effective the expenses.

Jrbashyan also announced that over the most recent 3 years the growth of the banking system in Armenia had been outpacing that of GDP with the result that banks demonstrate curious indicators, unlike other CIS and EE countries. “One glance at “loans to GDP” ratio which is the most important one showing the level of banking intermediation in the economy of a country shows that in 2012 Armenia was behind most peer countries, while in 2014 we have 47.7%. For comparison, this is close to Russia’s indicator and outstrips Georgia’s”, said Jrbashyan.

He also said that unlike Georgia, where two major banks hold almost 80% of the whole market, in Armenia the share of top 5 banks was only 46%.



Updated 16.03.2015, 17:36
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