Autocredits market of Armenia increased by 83.5% during the year

Arminfo
2007-04-14 15:35:00

The market of banking autocredits of Armenia surpassed all the
optimistic expectations within 2006, having assured the annual growth
by 83.5%. According to the data of AmRating, the independent Rating
Agency, the volumes of autocrediting in the country’s banking system,
as of January 1, 2007, made up 19.216, 2 mln drams. In the opinion of
the Agency’s analysts, these indicators are directly concerned with
the fact that the republic’s automobile market shows high growth
rates. Only in January, 2007, which is not the best month from the
viewpoint of a seasonal factor, the import of passenger cars to the
republic has grown 1.5 times to 2403 units against 1572 cars for
January, 2006. At that, the import of "less solvent cars" of Russian
production reduced, that is, 489 against 686 units in January,
2006. Half of the cars, imported to the republic, are over 13 years
old and their cost varies within $6-10 thsd. In the experts’ opinion,
the share of the old cars will lessen, while that of the fresher and
more expensive ones will increase. This circumstance, in the opinion
of the Agency’s analysts, indicates the further growth of indicators
of the autocreditingmarket as one of the most profitable segments of
the banking retail, by 80% per year, at the minimum, in summary terms.

According to the data of AmRating, the triplet of the most
autocrediting banks of Armenia, as of the beginning of the year,
included the Areximbank, that gave autocredits for 2.757 bln drams,
"HSBC Bank Armenia" (5.173 bln drams) and Armeconombank (2.602 bln
drams). The first bank could keep the leading position in the market
during the year, while the "HSBC Bank Armenia" has jumped from the 9th
to the 1st place. The Areximbank has taken the send place, the
Armeconombank has risen one step higher, from the 4th to the 3rd
place. The fourth place is taken by Artsakhbank (2.190 bln drams), the
fifth place – by INECOBANK (1.866 bln drams).

The leading five, by the autocredits portfolio upon results, 2006,
included "HSBC Bank Armenia" – 2.962 bln drams, Areximbank – 2.446 bln
drams, Artsakhbank – 1.926 bln drams, INECOBANK – 1.858 bln drams and
Armeconombank – 1.854 bln drams. The "HSBC Bank Armenia" has made a
vast leap from the 9th place to the leaders, the Areximbank has kept
the second position, the Artsakhbank has moved three positions forward
, the INECOBANK held out in the fourth place and the Armeconombank has
secured the fifth position for itself.

In the AmRating analysts’ opinion, there are no apparent favourites of
race in the strict competitive activity in this market as yet, that is
proved by the indicators growth dynamics. Thus, the Armenian
Development Bank (ADB) with 15 mln drams has assured growth by 3619%,
the Unibank – by 264%, the BTA-Invest Bank – by 208%, the ArtsakhBank
– by 192%. Meanwhile, the market leader, Areximbank, assured the
growth of this indicator by 29,3% in all, the Armeconombank – by
93%. Therefore, the picture of priority in the market by 2008 may
change, especially as some of the former leaders today reduce their
previous indicators. Thus, the VTB Bank Armenia, that gave the
autocredits of 470.9 mln drams in 2005, decreased its indicator by
28.2%, upon results of, 2006, the Ardshininvestbank, that was in the
triple of leaders in 2005 with indicator of 1.992,3 mln drams, by
15,7%, the Bank reduced its indicators (299.2 mln) by 34,8%.

Upon the analysis results, the lowest share of autocredits in the
total indebtedness of physical persons, as of 2006, is fixed at
Armbusinessbank (ABB) – 1.1%, followed by VTB-Armenia – 3,7% (0.95% in
2005), ADB – 13.3% (0.41 in 2005), BTA-Invest Bank – 15.76% (7,88% in
2005) and Armeconombank – 15,8% (12.64% in 2005). The share of the
market leader, the Areximbank, makes up 11%, the "HSBC Bank Armenia" –
20%, the Armeconombank – 15.8%.

By the number of the given autocredits, the leading position in 2006
was taken by Armeconombank – 1621, that has kept the priority in the
yearly section (915 in 2005). The second place is taken by Areximbank
– 1054 (855 in 2005, that is the second place). The third place is
secured for "HSBC Bank Armenia" – 1015, which has made a yearly leap
upward by 6 positions (64 in 2005). The Artsakhbank is in the fourth
place – 805, which has advanced by two positions since 2005 (265
deals). The five of leaders, by the number of given credits, is closed
by INECOBANK – 650 against 597 in 2005, which has lowered by one
position.

Meanwhile, in the Agency analysts’ opinion, the active development of
the autocredits market entails synergy of the financial market
segments. Thus, according to ArmInfo data of Ranking of the leading
insurance companies of Armenia, the premiums of insurers, received for
the vehicle insurance, have shown nearly the same growth. Almost al
the banks, except for the two ones, insure the credited cars. The
total volume of insurance premiums in this segment, as of the
beginning of the year, made up 1.064,5 mln drams, however, according
to the experts’ data, the share of the gathered autocredit premiums
makes up 1,5% of the banking autocrediting volume on average, that
makes up about 250 mln drams by approximate estimations. The leaders
in the autoinsurance market are the INGO Armenia with volume of
premiums of 274.8 mln drams, RASCO – 232.1 mln drams and Sil Insurance
– 186.4 mln drams.

Nevertheless, in the AmRating analysts’ opinion, despite the growth of
the autocredits market indicators, this sphere of consumer crediting
is less developed from the viewpoint of quality of the proposed credit
products than the sphere of the consumer equipment crediting. Such
products as credits without initial fee, interest-free credits,
express-credits are absent in the market as yet, that is connected
with insufficient level of credit histories market development and
absence of scoring systems for the clients solvency estimation.
However, under the competition growth conditions, the analysts
forecast the further improvement of the market as regards
liberalization of the crediting terms, reduction of rates from the
present 18% on average, "prolongation" of terms to 5-6 years,
reduction of the credited cars’ age limit.