Together with Mher Ananyan, Chief Executive Officer and Chairman of the Executive Board of AraratBank, we summed up the results of the outgoing year 2022, talked about AraratBank’s achievements, the RA banking sector, the UN Global Compact international initiative and the Women’s Empowerment Principles (WEPs) programme.

- Mr. Ananyan, as we wrap up the passing year, could you please sketch out its main features in terms of the banking industry and finances in general?  

- After successive waves of crises in the previous two years, the 2022 was expected to be a relatively balanced year, but different geopolitical developments in the region brought about new challenges to the banking sector. As a result of the Russian-Ukrainian war, financial markets of the region experienced a high level of volatility, and the financial and banking sectors of Armenia were certainly not spared its effects.

In this context, throughout the year the banking sector of Armenia has been increasingly active. As a result of the record-high inflow of individual and legal entities from Russia to Armenia, banks saw a significant increase in the customer service volumes. Projections, however complicated they may be, indicate that the banking system will prove resilient to potential shocks since it has the track record of being one of the most viable institutions of the Republic of Armenia. Of course, the unexpected crises have strengthened and rendered our banking system more flexible.

Thanks to its high-level risk management mechanism, efficient policies and synergies, the ongoing regular market analysis and other important factors, AraratBank has been able to respond and will continue to respond to any unforeseen situation with utmost professionalism and integrity. We already know how customers react and how their behavior and requirements change in such cases.

I am happy to state that during the crisis years, both AraratBank and all commercial banks of Armenia have maintained high liquidity ratios, remained highly capitalized and have continued their normal course of operation.

- Summing up the year, what was it like specifically for AraratBank?  

- We can say that the passing year was a year of unprecedented growth for AraratBank.

In fact, the Bank has continued to maintain high sustainability indicators in recent turbulent times. Liquidity level is one of the key indicators for the bank’s performance: under our internal regulations, the preferred level of highly liquid assets for the previous year was set at 25% of total assets, and at the moment this indicator varies between 35% and 40%. There has also been an improvement in the level of capitalization, and now the capital adequacy ratio stands around 15.5%. Talking about the behavior of loyal customers, we can state that at a time of crisis and uncertainty, the level of trust in banks has increased as people have found from their own experience that the banking sector is stable in any situation, and their assets are safe. This is evidenced by a 38% increase in the funds attracted from customers during the first 3 quarters. During the year, the Bank made two bond issues with a total amount of USD 8 million, which were successfully placed in full volume.

This year, there has also been an upward trend towards early repayment of loans. This shows an unplanned or unexpected increase in customer incomes. In order to properly allocate the generated income, they preferred to pay off loans ahead of the time and carry out their further projects with their own funds. To deliver more effective results, the banks are gearing up to develop and offer new, more competitive and affordable products to their customers

- What were the most significant achievements of AraratBank in 2022?

- AraratBank wrapped up the outgoing year with higher-than planned performance indicators. Of course, this is encouraging, but nevertheless we shall remain vigilant. To maintain these indicators, we shall continue our clear policy that before initiating a transaction or rolling out a new product or service, we should carry out multiple analyses, unbiased assessment and make decisions in line with internal standards.

With this approach, not only we comply with global trends, but also develop new working methods specific to each situation, adopt a new anti-crisis strategies and successfully face new challenges through the policy of crisis management and business continuity in emergency situations.

AraratBank’s activities are well-balanced: there is no singly product in the market which we cannot compete with. While embarking on an ambitious rebranding program two years ago, we announced a transition to a digital platform. This year's achievements include the full launch and steady maintenance of our digital banking platform. AraratBank has also joined the Google Pay and Apple Pay systems and closely cooperates with international institutions.

In 2022, we made a progress towards developing leasing operations. A Leasing Operation Division has been set up within the Bank, and now, with the new tools and technical assistance provided, we are expanding the lending opportunities in the leasing sector for both existing and potential customers. Being a member of Lessors' Association of Armenia, we effectively cooperate with various companies. We believe that this area of banking is one of the fundamental prerequisites for the development of the Armenian economy and, as such, it should be developed further.

Green lending is also one of the priority directions under the strategy of AraratBank, looking mainly to service ecosystems and promote the acquisition of electric cars. Indicators suggest that our customers are highly interested in this product. During 2022, we took active actions in this regard, and I think its tangible benefits will become evident in 2023.

- What notable results have been achieved in international cooperation?

- AraratBank has a broad framework of international cooperation, and 2022 was productive also in terms of its expansion. AraratBank, jointly with the Dutch entrepreneurial development bank (FMO), is implementing a first-of-a-kind project in the region. The project focuses on financing migrants, COVID-19-affected households and entrepreneurs from socially disadvantaged groups, with the Dutch development bank assuming the greater share of the risk of default by the customer. This project has now entered its second year, and its indicators are quite striking. At the onset of the project, we expected that the ratio of non-performing loans in this portfolio would be higher than average, but much to the surprise of our Dutch partners and to our great satisfaction, the NPL ratio is much smaller than the same ratio in the Bank’s total credit portfolio. This project is an excellent financing opportunity for our countrymen who have potential for developing their own business, but lack funds and collaterals.

I would like to highlight that, in addition to financial programs, we also place great emphasis on social programs. In 2022, AraratBank joined the UN family through the UN GLOBAL Compact international initiative. This is a group of various business organizations created on a voluntary basis, which have expressed their commitment to aligning their strategy and actions with ten basic principles aimed at protection of the environment and human and labor rights.

We realize that we serve the society whose trust has the most fundamental role to play in the development of the Bank. Following the ten key principles, the Bank will strengthen not only the existing relations with its partners and clients, but will also pledge support to vulnerable social groups, providing them with an enabling environment and appropriate tools to be integrated in the economy of the country.

As a matter of fact, in 2022, AraratBank joined the pilot project of providing food cards for food-insecure families launched by the RA Ministry of Labor and Social Affairs and the UN World Food Programme.

Staying true to the UN principles, we create an environment which will foster trust of vulnerable social groups towards the Bank and establish mutual understanding and transparency in the bank-customer relationship, thus making financial support and guidance available to all sectors of society. This program will allow to broaden financial inclusion by cooperating not only with financially stable but also with disadvantaged groups of society.

- AraratBank is known to be a member of the UN Women’s Empowerment Principles (WEPs) project since September 2022. What does this cooperation imply?

- The project consists of 7 principles offering guidance on how to promote women's empowerment in the workplace, business and community. Since we have already been guided by these principles, we did not have to assume commitment to follow the project values: we have joined the project and are developing an effective cooperation.

AraratBank does not make gender distinction among its employees: everyone has equal opportunities for work. Training courses are organized for both female entrepreneurs and female employees. The management should be the first to commit, realize, value and support gender equality in the workplace. We apply a specific policy towards women entrepreneurs, seeking to provide them with constant support and product-related privileges.

- What are projections for 2023?

- Today, it is rather hard to make long-term predictions. In 2023, we will continue to build upon and be guided by the same vision, principles and strategy. While bidding farewell to a rather controversial 2022, I wish that 2023 be a year of peace and stability for our country. May the New Year bring you prosperity and happiness and may all your dreams come true! Merry Christmas and Happy New Year!