Financial analysis of Armenian banking sector - Q1 2021

27.04.2021 | 08:17 Home / News / Articles /

We are presenting to your attention the summarized results of Armenian banking sector for Q1 2021, prepared and published exclusively on Banks.am by 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. R. Melikyan is a full member of ACCA and an Oxford University graduate (Executive MBA).



The purpose of this article is to analyze major financial indicators of Armenian banking sector for Q1 2021.


Net Profit

- Total net profit of all Armenian banks for Q1-2021 is equal to AMD 19.4bn, which is by AMD 4bln (by 17%) less than it was recorded in Q1-2020.

- Major reason for the mentioned decrease of net profit is significant increase of expenses related to loan loss provisioning (by AMD 7.5bn or by 55%).



Total loan portfolio

- Total loan portfolio of banking sector during Q1-2021 decreased by 0.9%.

- As of 31.03.2021, total loan portfolio is amounting to AMD 4.017bn and its share in total assets is 60%.

- Mentioned total loan portfolio includes retail and corporate loan portfolios.



- Market share of 5 largest banks (Ameriabank, Armbusinessbank, Ardshinbank, ACBA Bank and Converse Bank) by total loan portfolio is 61.4%.

- Market share of 3 largest banks (Ameriabank, Armbusinessbank and Ardshinbank) by total loan portfolio is 47.5%.
 
- Ameriabank has the largest market share - 17.2%.



Current accounts and deposits from customers

- During Q1-2021, total balance of current accounts and deposits of retail and corporate clients of banking sector decreased by 0.6%.

- As of 31.03.2021, total balance of current accounts and deposits of retail and corporate clients is amounting to AMD 3.543 bn and its share in total liabilities is 62%.



Bonds

- During Q1-2021, total balance of bonds issued by Armenian banks increased by AMD 24bn, or 6%.

- 12 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.



Total equity

- The major component of total equity of Armenian banking sector is Share Capital (including share premium), with the share of 58% and is amounting to AMD 534bn as of 31.03.2021. Share capital (including share premium) increased by AMD 370m (AEB- AMD 261.5m and Ameriabank- AMD 108.5m).

- The second largest component - Retained Earnings (including general reserve) with the share of 37% is amounting to AMD 337.7bn as of 31.03.2021. During Q1-2021 retained earnings (including general reserve) of Armenian banking sector increased by AMD 19.2bn, or by 6%. Except for VTB Bank (Armenia), all Armenian banks have retained earnings. Two banks declared dividends in Q1-2021, amounting to AMD 259m (AEB- AMD 220m and Ameriabank- AMD 39m).

- Revaluation Reserves (mainly PPE and Financial Assets revaluation reserves) have share of 5% and are amounting to AMD 41bn as of 31.03.2021. Revaluation reserves decreased by AMD 3.3bn or 7%.



Full version of the analysis of Armenian banking sector results for Q1 2021 is available on this link.

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

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

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