We are presenting to you on-demand deposits, term deposits and bonds analysis of Armenian banking sector, prepared and published exclusively on Banks.am by a specialized consulting company RUMELS Management Solutions.

RUMELS Management Solutions is a specialized consulting company. The company was founded by Ruben Melikyan in 2013. For the past 15 years Ruben Melikyan occupied responsible management positions in companies operating in different spheres, thus gaining experience in various sectors of economy such as internal and external audit, retail and wholesale trade, mining industry and banking system. Ruben Melikyan is a full member of ACCA and Oxford University graduate (Executive MBA).

The purpose of this article is to analyze the balances of on-demand accounts (including current accounts), term-deposits and issued bonds of Armenian banking sector for 2019 and 2020.

The analysis is performed separately for funds attracted from individuals (RETAIL) and legal entities (CORPORATE).

- Total liabilities of banking sector by 70% consists of on-demand account, term-deposits and issued bonds.

- Banks have different structure of total liabilities. The lowest proportion is by Mellat Bank (15%) and the highest one is by VTB Bank (Armenia) (92%).

- Share of on-demand accounts remained almost unchanged during 2020 and was equal to 37%-38%.

- Share of issued bonds increased from 4.9% to 10.9% during 2020.

- Last year, changes were made in the law on income tax, as a result of which, interest income received from bonds are exempt from income taxation (for individuals).

- Investments in bonds are still expected to remain very attractive, especially for individuals.

- The mentioned 20889 include on-demand deposits, current accounts and balances of card accounts.

- During 2020, total balance of on-demand accounts of banking sector was increased by 112 bln AMD, or 8.1%.

- The following banks recorded the largest relative (%) increase of balances of on demand accounts in 2020: IDBank (79%), ACBA Bank (51%) and Artsakhbank (37%).

- During 2020, deposit balances of individuals (RETAIL) of banking sector decreased by AMD 97B, or 6.3% (if AMD depreciation during 2020 (8.9%) will not be accounted for, then the real decrease was by about AMD 192B, or 12.5%).

- However, deposit balance changes should be reviewed with the changes of balance of issued bonds. During 2020, total balance of bonds issued by Armenian banks increased by AMD 252B or by AMD 52B, without taking into account AMD depreciation and two issuances of bonds in foreign countries, organized by Ardshinbank (USD 300M) and Ameriabank (USD 50M). Information regarding investments of individuals in bonds, issued by the banks, is not disclosed in the financial statements. Thus, it is not possible to quantify the mentioned effect.

- During 2020, total balance of bonds issued by Armenian banks increased by AMD 252B, or 140%. This huge increase is mainly explained by issuances of bonds in foreign countries by Ardshinbank (USD 300M) and Ameriabank (USD 50M).

- 11 from total 17 banks have issued bonds. The majority of bonds are listed on Armenian Stock Exchange.

- Issuance of bonds by the banks is encouraged by the Central Bank of Armenia. Mandatory reservation normative for issued bonds is by 8 times lower than for attracted deposits.

- 17% of issued bonds are denominated in local currency (AMD).

Full version of the analysis of deposits and bonds of Armenian banking system 2019-2020 is available by this link.

Full version of the analysis of the loan portfolio of Armenian banking system 2019-2020 is available by this link.

Full version of the analysis of the profitability level of Armenian banking system 2019-2020 is available by this link.