FITCH RATINGS ANALYST: HIGH CAPITALIZATION OF MOST ARMENIAN BANKS WILL HELP ABSORBING LOSSES IN CASE OF WORSENING ASSET QUALITY

ArmInfo
2009-09-16 19:25:00

ArmInfo. High capitalization of most Armenian banks will help them
absorbing losses in case of worsening asset quality, Fitch Ratings
Agency’s Analyst on CIS Financial Organizations Nelli Badalian told
ArmInfo.

She said that the global financial and economic crisis has
predetermined development of Armenian banks since late 2008. During
2009 the country experienced sharp devaluation of the national
dram that has led to increase of foreign currency deposits, she
said. Economic decline and devaluation have negatively affected the
quality of bank assets and the share of defaulted loans has grown to
10% of total portfolio since early 2009 and has not changed over the
last two months. Given the significant economic decline, such share
of defaulted loans is moderate though further growth of default is
not ruled out either, she said.

N. Badallian said the share of foreign market funding in Armenian
banks is not high. Bank did not issued euro bonds, almost did not
attract funds through syndicated loans. Funds were provided either by
international financial institutions or parent banks since possible
extension of terms is easier with them, she said.

Armenian national dram sharply devaluated on March 3 2009. GDP fell
16.3% for Jan-Jul 2009 and reached 18.5% in late July.