S&P Global Ratings: Armenia’s banking sector remains highly profitable

Armenia’s banking sector remains well capitalized and highly profitable, supported by strong net interest income and resilient economic growth. 

This is stated in a news release issued by S&P Global Ratings regarding the affirmation of Armenia’s ratings.

“Credit growth remains robust, driven primarily by consumer and mortgage lending, although tighter macroprudential measures and the gradual phase-out of mortgage tax incentives have begun to cool housing demand, particularly in Yerevan. 


While rapid credit expansion has increased private-sector indebtedness, we consider the associated risks manageable at this stage, given banks’ strong capital buffers, resilient asset quality, and expectations that profitability will remain robust despite gradually normalizing from recent highs,” the news release reads. 

S&P Global Ratings notes that the gradual dedollarization of banks’ balance sheets has further reduced foreign exchange risks, while banks’ renewed reliance on nonresident and IFI funding is unlikely to materially weaken funding conditions. 

Elevated geopolitical uncertainties remain the principal downside risk to the sector, S&P Global Ratings adds.