ARMENIAN BANKS CLOSING THE YEAR WITH PROFIT

Aysor
Aug 25 2009
Armenia

In the banking area legislative improvements are expected. As Emil
Soghomonyan the president of the Union of Banks of Armenia informed
during the press conference the legislative proposals from the
banks the Union has summed up and presented to the RA Government. He
mentioned the legislative changes in the value added taxes, the taxing
of the non residents, and the pledging of moveable estate, etc.

E. Soghomonyan agreed that the banks have difficulty in providing
credits to the newly starting businesses: "We have a lot of cases
when, especially in the past , the banks were providing credits with
in cash and the future control was becoming impossible and it was
turning out that they had got a car by the credit. At present if
the banks are being sure least for 90% that it is a newly starting
business at they provide a credit."

Coming up to the credit percentage the president of the Union of
Banks assured that the percents are not that much high. According to
him because of the crises conditions the risks were to grow and not
the percents.

If included for 14 %, the cost price is 2%. So it is 16 %. At best 2%
margin must be used, i.e. credit must be provided with 18 %. 18 % will
have normal business credits and the more risky fields, consumers’ one,
for hypothec credits will have higher percents",-said E. Soghomonyan.

As to him, in Armenia the process of not paying back the credits
comprises 5-6% this year. Last year it was 1%. As to E. Soghomonyan
5-6 % is a big amount if the general capital is 30-40 million.

"In the first half of this year the banks registered profit of 4
billion 300 million (nearly 12 million drams). As compared with
the last year, this number is very low. 28 billion annual profit,
14 billion for six months. 16 banks out of 22 recorded profits, 6
had losses. The reason for losses was the omission of the currency
exchange rate on 3 March",-mentioned E. Soghomonyan, excluding that
the banks will have losses by the end of the year.

He ensured that if there is the second phase of the crisis, the
Armenian "banking system will not suffer".

E. Soghomonyan predicted a 10 % decrease in the economic situation
of RA. As to him, next year there will not be any decrease and the
increase will comprise 0%.